Shipments from ODM and IDH companies grew by 4% annually in 2019 against the declining trend in the overall smartphone market, according to Counterpoint Research. This was a result of various key smartphone brands continuing to outsource the design and manufacturing of their smartphone models to the external IDH and ODM communities during the year.
"In terms of design outsourcing, orders to smartphone ODMs (for design+assembly) grew by 18% annually while orders to IDH (for design only) dropped by 8% annually. The trend of clients opting towards ODM's turnkey solution was more apparent in 2019," said Flora Tang, a Counterpoint analyst. "ODM growth was mainly driven by rising orders from Samsung, Oppo, Realme, Xiaomi and LG. However, Huawei Group cut orders to ODMs, shifting its strategy towards an 'in-house design, out-sourced manufacturing' business model."
"Looking at the competitive landscape of the smartphone ODM/IDH market," Tang continued, "Wingtech, Huaqin and Longcheer continued to dominate the combined global smartphone ODM & IDH segments. The segment is getting increasingly consolidated with the top three players accounting for 68% share in 2019, compared to 52% two years ago."
In 2019, Wingtech topped the smartphone ODM rankings, surpassing Huaqin for the first time globally, thanks to increasing orders and design wins from Samsung and others, according to Counterpoint. However, Longcheer surpassed Wingtech in the smartphone IDH segment as Xiaomi moved part of its IDH business away from Wingtech. Huaqin Telecom, despite suffering orders cut from its major client Huawei, recovered with double-digit growth since 2H 2019. ODMs such as Tinno Mobile also saw a positive uptick in 2019, thanks to the rising orders from overseas OEMs and telecom operators.
With 2020 going to be the breakout year for 5G smartphones, uncertainty in the first half due to the coronavirus outbreak and the smartphone market becoming more concentrated, the ODM/IDH landscape will become more competitive, said Counterpoint.
In addition, many of these key ODMs are looking to diversify their design and manufacturing operations beyond China into markets such as India, Vietnam or Mexico in following the demand and regional regulations from some of their key customers which are strong in these regions, according to Counterpoint. Many of the key OEMs and supply chain players want to reduce their dependence on China geographically and operationally.