Major China-based handset vendors including Coolpad, Lenovo and Xiaomi Technology are unlikely to reach their shipment goals set for 2014 due to slow sales of 4G models in the third quarter and gloomy prospects for the fourth quarter, according to Digitimes Research.
The conclusion comes after Digitimes Research researchers and analysts made a visit to dozens of upstream and downstream makers in China's handset supply chain during the August-September period.
China-based handset vendor had been hoping that sales of 4G smartphones will improve significantly starting the third quarter after experiencing a period of sluggish sales in the first half of 2014. But most vendors saw their sales of 4G phones remain in doldrums in the third quarter.
Coolpad shifted its entire production lines to the production of 4G models in the first half of 2014 and ramped up its 4G smartphone shipments during the January-April period, resulting in a pile-up of 4G models in retail channels. Coolpad reduced its orders for upstream suppliers sharply after suffering flat sales in the third quarter.
Lenovo began to offer 4G models at the end of the second quarter but failed to ramp up 4G shipments in the third quarter due to an excessive stockpile of 3G models in the first half of the year. The vendor has since turned more conservative about the prospects for the fourth quarter.
Affected by slower than expected sales of 4G models in the third quarter, Xiaomi also saw its shipment momentum begin to decelerate in the quarter after its shipments and position in vendor rankings advanced significantly in the first half.
Digitimes Research believes that the smartphone market in China has reached its peak period and that efforts by China-based telecom operators to boost 4G smartphones in the fourth quarter would be limited.
Additionally, the promotion of 4G smartphones will also further squeeze the market share of 3G models, making most vendors unlikely to reach their 2014 shipment targets.