Chinese smartphone makers gain market share from Samsung’s exploding batteries

S&P Capital suggests Chinese makers may be able to capture around half of the Samsung Note 7 domestic market

PUBLISHED : Monday, 14 November, 2016, 4:17pm
UPDATED : Monday, 14 November, 2016, 10:58pm

A number of Chinese smartphone makers gained Chinese and overseas market share in the third quarter, taking advantage of the gap left by embattled South Korean giant Samsung – but there was no single manufacturer that benefited the most, according to analysts.

Samsung launched its Galaxy Note 7 on August 19, but suspended sales and began recalling the model in September after a string of battery explosions.

Following the recall, Samsung shares plunged almost 7 per cent and another 8.04 per cent in October after Samsung permanently halted production and sales of the smartphone.

S&P Capital IQ analyst Tzyy Loon Ng believes in total, however, Chinese makers may be able to capture around half of the Samsung Note 7 domestic market – a significant chunk, but it would be spread around various companies, with Huawei, Oppo and Vivo likely to be the biggest gainers.

However, there was no single company that most-clearly benefited in the quarter globally, with Huawei, Oppo and Vivo and Apple sharing the gains in different markets, Morgan Stanley researchers found.

Oppo overtook Samsung as number one in Asia Pacific for the first time in the third quarter, “leveraging their strength in China” to take a 13.2 per cent share regionally, lead analyst Jasmine Lu said.

Vivo and Oppo were two Chinese original equipment manufacturers among the top five gaining market share in the region on a year-on-year and quarter-on-quarter basis.

Huawei, however, did gain share in European, Middle Eastern and African (EMEA) markets, Morgan Stanley figures show, largely at the expense of Samsung, increasing its shipments by 65 per cent year-on-year to capture 11.4 per cent of the share.

Although Samsung’s EMEA share was down 4.2 percentage points year-on-year, it still ranked one in the region with 32.5 per cent of the share.

Apple also retained its share of the North America, but Samsung and Apple still dominated 60 per cent of the market, well above the third biggest smartphone maker.

“The next key lies in whether [Oppo, Vivo, Huawei and Apple] can widen their shares in overseas markets after the speed of its gains in China likely slows in the next few quarters,” Lu said.

“We hold our view that it will prove challenging for any of them to make inroads overseas without sacrificing profit margins.”

Globally, smartphones sales were flat year-on-year, with Asia Pacific and North America growing, while Europe, Middle East, Africa and Latin America declined.

The next key lies in whether [Oppo, Vivo, Huawei and Apple] can widen their shares in overseas markets after the speed of its gains in China likely slows in the next few quarters
Jasmine Lu, lead analyst , Morgan Stanley

SP Global’s Ng said Chinese players had gained a lot of market share in China – and he didn’t expect Apple’s iPhone 7 gains off the back of Samsung’s losses to be substantial.

“To a lot of Note 7 users, they have a different kind of view. They are more like Android fans instead of the iOS fan,” he told the Post.

“Fans of the Note 7, will probably stick with their Note 5 or they can chose to go for other Androids. If you look around the market, these [Androids] mostly come from Chinese players.”

Ng, however, certainly expects Samsung to continue losing market share.

“So far there’s no clear picture on their future development – but even if there is, it’ll be pretty hard for Samsung to gain back that confidence in the next 6-to-12 months.”

“In terms of the overseas market, it will be less substantial because there is more choice.”

Last month, Strategy Analytics executive director Neil Mawston said Samsung shipments fell 10 per cent in the third quarter of this year on the same period last year – its slowest growth rate for almost two years.

“Samsung will now be looking to its next flagship launch, the rumoured Galaxy S8 model, to recover momentum in 2017.”

Linda Sui, a director at Strategy Analytics called Oppo a “rising star”, growing 140 per cent in the third quarter on the same period the year before and outperforming its rivals.

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