November 21, 2024

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After their rapid ascent in the global smartphone market in the last few years, Chinese budget smartphone makers are now facing a slump, with some going bankrupt while others are tightening their belts.

Gionee, which filed for bankruptcy late last year after failing to pay back nearly $3 billion to its creditors, is one of the latest smartphone makers in trouble. Many others, including HTC and Oppo, are also struggling as they have been shutting down their overseas operations, including in India.

Market analysts said that the ongoing restructuring in the smartphone market is inevitable due to increasing market saturation, and the changing landscape will eventually benefit stronger players in the premium segment in the long term.

“Although February is traditionally an offseason in the Chinese smartphone market, the US-China trade dispute further exacerbated market conditions,” said Lee Seung-woo, an analyst from Eugene Investment & Securities, also attributing the increased price tags of Chinese smartphones despite little change in specifications to falling profits and rising inventories.

He said Samsung, whose market share has stayed below 1 percent since the fourth quarter of 2017 in China, has a lower risk of losing than local budget smartphone companies.

“Samsung could see its market share rebound as its latest flagship Galaxy S10 and mid-range Galaxy A models are receiving positive reviews there,” the analyst said.

According to the China Academy of Information and Communications, a state-run research institute, the entire smartphone shipments last year stood at 13.9 million, down 20 percent on-year and the lowest since 2013.

Some market watchers forecast that the downward trend could continue throughout this year, further affecting smaller smartphone makers in China.

Over the past years, Chinese smartphone makers, especially those in the second-tier segment, saw an exponential growth with price competitiveness, but their sales have been under pressure lately due to the heated competition.

Shenzhen-based QiKu Internet Network Scientific disbanded its research and development team last September, while Oppo’s India head resigned due to its widening losses in November.

By Kim Young-won (wone0102@heraldcorp.com)