Chinese smartphones prediction: domestic innovation to reshape the landscape
The prediction for new smartphones in 2024 is simple: it's not only a phone now.
A batch of tech upgrades in AI, chip, communications and screen make phones more like an intelligent assistant in the pocket, a controlling center for cars and an always online device even in regions without signals.
Many techs and innovations are developed domestically, which has reshaped the market landscape. The changes in consumption habits and domestic research development bring Chinese brands opportunities, both domestically and globally, while Apple's sales will decline at "double digits" this year, industry insiders said.
The good news is that the market will rebound.
Huawei's new flagship store in the Pudong New Area opens in January. Huawei was one of the fastest-growing brands in 2023 with its Mate 60 series.
China's smartphone sales will grow by 3.6 percent to 287 million units in 2024, the market's first yearly growth since 2021, and an early indicator of economic recovery, analysts said.
Researcher TrendForce says the smartphone industry is an early indicator of economic downturns and rebounds because buyers and sellers adjust inventories in their supply chain stocks.
Here are the predictions for the Chinese smartphone in 2024:
Booming domestic innovation
Oppo, with 600 million users globally, said at a conference in Shenzhen that it had many 5G and AI patents.
As the technical capability of the domestic supply chain continues to improve and has always had a cost advantage, Chinese firms offer more customized products, with innovation in chips, screens, storage, batteries, under-screen fingerprints, glass covers and body materials, said International Data Corp (IDC) in a recent note.
Oppo, with more than 600 million users globally, now has 50,000 authorized patents and 90 percent of them are invention patents, which makes it the No. 2 patent owner in China (behind Huawei), according to Pete Lau, Oppo's chief product officer.
"We own key patent layout in cutting-edge 5G communication, AI and other high added-value areas," Lau told a conference in Shenzhen when the company released its new year flagship models. The Find X7 series is on sale now.
Other brands, such as Huawei, Xiaomi, Honor and Vivo, also have own core patents, which are used in their recently released products.
Popularity of satellite communication services
Honor launched the new Magic 6 Pro phone in Shanghai on Thursday night, featuring a satellite communication service.
In September, Huawei raided the market with its Mate 60 models, with satellite communication a unique feature at the time. This year, several brands, including Honor and Oppo, have launched the function.
In a demo in Shanghai on Thursday, people could connect with satellites faster on Honor's new Magic 6 phone than on a Huawei model.
Zhao Ming, Honor's president, expected the new function to be a new communications standard like 4G, 5G, Wi-Fi and Bluetooth in future.
A satellite communication service, integrated into phones, allows users to stay connected and send SOS messages if necessary, especially in places where there is no mobile signal. Previously, a professional satellite phone was needed, normally heavy and expensive.
Although most consumers will seldom use such services in daily use, satellite communication will still become an important option for high-end products, IDC said.
AI device in the pocket
Find X7, with localized AIGC photo optimization and phone scripts production, is a start to make AI integrate deeply in people's daily lives, said Oppo.
Besides satellite communication, on-device AI models will significantly enhance the competitiveness of high-end products, IDC added.
Brands have boasted AI features such as AIGC (AI generated content), automatic phone script generation and calendar creation and one-click "reducing" strangers in photos.
Several Chinese brands have offered localized AI models in flagship models, offering generative AI services while protecting privacy and data. Comparatively, Apple's AI is still at the "Siri" level, a technology born over a decade ago.
Honor's Zhao said that the smartphone's operating system is worth "totally rewriting" for AI optimization.
Find X7, with localized AIGC photo optimization and phone scripts production, is a start to making AI integrate deeply in people's daily lives, said Oppo.
Deeper car connection, even new cars
The integration between smartphones and the car industry will deepen in 2024.
In China, vehicle enterprises announced plans to release their own brands of smartphones, while phone manufacturers, in addition to directly building cars, will make more use of their own software development and multi-terminal interoperability and interconnectivity advantages. The smartphone will become more of a cooperative vehicle enterprises' car key and central control platform. Both sides continue to strengthen cooperation, covering unmanned driving and intelligent cockpits, forming a perfect ecological interconnection.
At the end of December, Xiaomi unveiled the SU7, its first electric vehicle, a key step for the tech giant's car-business expansion and its ambition to become "China's Porsche and Tesla," Chief Executive Lei Jun said.
Xiaomi has invested over 10 billion yuan (US$1.41 billion) in the auto business and has a team of 3,400 engineers.
Chinese tech giants, including Huawei and Oppo, are expanding into the smart cabin and electric car business.
Selective and practical consumers
OnePlus Ace 3, which will start sales on Monday from 2,599 yuan, is a "full-function" phone targeting mainstream consumers.
In China, consumption is more selective and targeted, returning to the experience of using the product itself and choosing products that are more suitable for them. As a result, the share of tech-savvy and practical people will increase in 2024, analysts said.
On Monday, OnePlus will start sales its Ace 3 model, with prices from 2,599 yuan (US$362). The model, with one-tigabyte storage, eye-friendly screen and super-fast charging and enhanced battery, targets mainstream consumers.
Li Jie, OnePlus China president, said in Shenzhen that the new phone's battery and screen are also developed with Chinese supply chain partners, such as BOE, China's largest flat panel vendor.
On the other hand, Apple's phone sales in China will likely see a double digit decline in 2024 with "much stronger" domestic competition. In the first week of 2024, Apple's iPhone sales in China dropped by 30 percent, according to a recent note from Jefferies analysts.
Huawei's surge also represented consumers' attitudes. Mate 60's sales surge only occurred after Huawei featured 5G services in the phones.
Continued overseas expansion
People queue at a smartphone store on Thursday. China's smartphone sales will grow by 3.6 percent to 287 million units in 2024, the market's first yearly growth since 2021.
Even though facing challenges, Chinese firms didn't slow the pace to go global.
In 2023, Honor generated rapid growth in overseas markets, including in Europe. This year, its overseas sales will grow at least 50 percent, Zhao said on Thursday night in Shanghai.
Oppo now has 260,000 outlets nationwide and ranks among the top three vendors in 20 countries and regions, including top in some Asian countries such as Indonesia.
Both vendors emphasized that they have gained shares in mainstream and high-end markets, mainly phones priced at over US$400, and even US$600 and above globally.
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