Chinese Smartphone Profitability Driven by 5G, Huawei Ranks Second by Revenue
COVID-19 and China
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Surpassing Samsung (005930:KR) and Apple (AAPL:NASDAQ), and taking 20% of the global smartphone shipment in the second quarter of 2020, Huawei once again beat its major Korean competitor Samsung in terms of smartphone revenue volume. During the second quarter of 2020, Huawei accounted for 20% of the global smartphone revenue, ranking the second. The first position is taken by Apple, the one with apparent technology premium driven by its operating system and in-house designed processor. Apple capture over one-third of the global revenue and in the meanwhile captured around 59% of the global smartphone industry profit.

According to Counterpoint Research, Huawei's considerable revenue volume is partly driven by the averaging selling price enhancement in the Chinese market, which is the result of the aggressive 5G smartphone shipments. Though according to our previous analysis, Chinese vendors have been competing for 5G smartphone market by launching lower priced phones and dragged the average 5G phone price 43% down to USD 369 from January to June 2020, the new releases of high-end 5G phones, such as Huawei P40 series flagship, Mi 10 and OPPO Reno series have significantly driven the average price up. During the second quarter of 2020, the average selling price in the Chinese market increased by 13% year-over-year.

Among the top five global revenue generators, Chinese vendors took three positions, leaving Xiaomi(01810:HK) outside the list. Pledged to have net profit margin less than 5%, the company is still aligning to the low-price strategy, which present issues with the corporate profitability.

Editor: Luke Sheehan

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