• Effects of the US export restrictions and the spin-off of Honor as a separate entity operating in the smartphone market cited as reasons.

• Samsung is expected to retain its leadership, followed by Apple, Xiaomi, Oppo, Vivo, and Transsion this year.

• Global smartphone production is expected to increase by 9% to 1.36b units this year compared to 1.25b last year.

• Penetration rate of 5G smartphones is expected to increase to 37% in 2021 compared to 19% last year and reach 500m units.

Chinese smartphone manufacturer Huawei is expected to tumble from third place in 2020 to seventh place in 2021 due to the effects of the US export restrictions and the spin-off of Honor as a separate entity operating in the smartphone market.

The aim behind this spin-off is to ensure the survival of Honor, which has become a major brand in the global smartphone market after years of labour. However, it remains to be seen whether the “new” Honor can capture consumers’ attention without support from Huawei.

Also, Huawei and the new Honor will be directly competing against each other in the future, especially if the former is somehow freed from the US trade sanctions at a later time. With the new Honor seeking to ramp up production, Huawei will have more difficulty in regaining market share for smartphones.

In 2021, Samsung is expected to retain its leadership, followed by Apple, Xiaomi, Oppo, Vivo, and Transsion. Together, they will account for almost 80 per cent of the global smartphone market.

According to research firm TrendForce, the global smartphone production reached a mere 1.25 billion units in 2020 and Samsung remained the leader, followed by Apple, Huawei, Xiaomi, Oppo and Vivo.

The most glaring change from the previous year is Huawei’s market share.

Pandemic to remain the central variable

The global smartphone market is expected to gradually recover to 1.36 billion units, a nine per cent year-on-year increase as people become accustomed to the “new normal” resulting from the pandemic despite an 11 per cent decrease in smartphone production last year.

However, the pandemic will remain the central variable (or the biggest uncertainty) in the production projection because it will continue to exert significant influence on the global economy.

Besides the pandemic, the performance of smartphone brands during 2021 could also be affected by geopolitical instabilities and the lack of available production capacity in the semiconductor foundry market.

The Chinese government’s aggressive push for 5G commercialisation in 2020 helped the market to reach 240 million units, with 19 per cent penetration rate.

The Chinese brands accounting for almost a 60 per cent market share in 5G space.

5G to remain main topic

While 5G will remain a major topic in the smartphone market this year, various countries will also resume their 5G infrastructure build-out, and mobile processor manufacturers will continue to release entry-level and mid-range 5G chips.

 As such, the penetration rate of 5G smartphones is expected to undergo a rapid increase to 37 per cent in 2021, for a yearly production of about 500 million units.

TrendForce indicates that smartphone brands’ recent bullish outlook towards the 2021 market and their attempt to secure more semiconductor supplies by increasing their smartphone production targets can potentially lead these brands to overbook certain components at foundries.

However, smartphone brands may adjust their component inventories from the second quarter of this year to the third quarter and reduce their semiconductor procurement activities if actual sales performances fall short of expectations, or if component bottlenecks remain unresolved, leading to a widening inventory gap between bottlenecked and non-bottlenecked parts.

Even so, TrendForce still forecasts an above-90 per cent capacity utilization rate for foundries in 2021.