The shipment volume of smartphones in China has been continuously decreasing for ten consecutive quarters. The latest reports from various research institutions, including TechInsights, Counterpoint Research, IDC, and others, show that the year-on-year decline in Chinese smartphone sales/shipment volume in the third quarter of 2023 ranges from 3% to 6.3%. Although the survey data may vary, the decline of smartphone shipments is an obvious direction.
Against this backdrop, China's leading semiconductor packaging and testing company JCET recently stated in an earnings call that it has observed a resurgence in the smartphone market. Not only has the number of smartphones increased, but smartphone hardware is also evolving to support new applications, particularly the use of large language models (LLMs), which are gradually making their way into high-end smartphones. JCET, as a packaging company, deeply feels this shift.
According to reports from Chinese media, including Jiemian, JCET stated during its third-quarter 2023 earnings call that after two difficult years in the Chinese smartphone market, all brands are vigorously exploring new smartphone applications. The integration of LLMs into mobile computing services will be prioritized in the high-end smartphone sector.
Citing sources from JCET, Chinese media point out that the recovery in the smartphone market, particularly in high-end hardware applications, is quite noticeable. Signs of recovery are observed, especially in markets related to JCET, such as RF front-ends and mobile memory chips, and they are expected to continue growing.
From the perspective of JCET, the resurgence of the Chinese smartphone market is not just about an increase in quantity. It represents hardware upgrades and a structural development trend towards higher-end specifications. Consumer demand for smartphone upgrades and replacements is emerging. For JCET, the resurgence of the smartphone industry is a significant boost for the IC industry.
JCET is already advancing in the field of advanced packaging and testing, integrating 4-nanometer smartphone chips, CPUs, GPUs, and RF chips. It has deep collaborations with SMIC and Qualcomm. Therefore, its observations on the smartphone market are indicative of the industry's direction.
However, whether the smartphone market can move towards sustained recovery after the gradual inventory de-stocking remains to be seen. The Q3 earnings conference of SMIC on November 10th will also provide another window into the demand trends for Chinese smartphones and consumer electronics.
Industry experts also list several factors that are optimistic about the resurgence of the Chinese smartphone industry: First, the implementation of applications like 5G or even 5.5G in China is expected to drive the immediate demand for 5G users to upgrade their devices. Second, the release of new products by companies like Huawei and Apple is expected to stimulate frequent users to upgrade.
Third, the smartphone replacement cycle is soon underway, and even though some users may delay their upgrades and take a wait-and-see approach, there is still a portion of consumers with purchasing demand. Chinese companies like Huawei have been releasing new foldable smartphones, which may also stimulate demand in the smartphone market.
