Smartphone shipments from ODM/IDH (Original Design Manufacturer/Independent Design House) companies grew 12% YoY in 1H 2020 against the declining trend in the overall smartphone market (-18% YoY), according to the latest research from Counterpoint’s ODM/IDH tracker. As a result, smartphones with outsourced designs (from ODM/IDH companies) rose to account for 36% share of the total global smartphone shipments, up from 27% in 2019.
Exhibit 1: Global smartphone design operation status in 1H 2020
Source: Counterpoint Global Smartphone ODM/IDH Tracker, 1H 2020
Research Analyst Flora Tang said: “Although the COVID-19 pandemic materially impacted the global smartphone market, ODMs managed to achieve robust growth beyond our expectations. Growth of the ODM market was primarily driven by increasing orders from key clients Samsung, OPPO/realme and LG. Samsung and OPPO group initiated the cooperation with ODMs in 2H 2018. Having benefitted from the tie-up in terms of product development costs and efficiency, these two companies have been expanding this cooperation with ODMs. Today, they have become the largest clients in the global smartphone ODM market.”
Commenting on the impact of COVID-19 on the smartphone ODM business, Flora said: “We find the impact much less severe than the overall smartphone market, as most orders outsourced to ODMs were devices in the sub-$150 price band. In 1H 2020, share of the sub-$150 smartphones grew by three percent points to account for 45% of the global smartphone sales, as consumers tended to constrain their spending under a gloomy economic outlook. Major OEMs including Samsung, OPPO/realme, LG and Motorola tightened the cooperation with ODMs to further minimize product development costs. The smartphone ODM market would have enjoyed even stronger growth momentum, if not for the COVID-19 pandemic. Parts of orders from clients’ India, Europe and LATAM markets had to be deferred to the second half due to the nationwide lockdowns in some of these regions.”
Exhibit 2: Share of global smartphone sales by price band
1H 2019 vs. 1H 2020, Wholesale price in $
Source: Counterpoint Smartphone Market Pulse Service, 1H 2020
Looking at the competitive landscape of the smartphone ODM/IDH market, Research Analyst Mengmeng Zhang said: “Market share of the top 3 ODMs – Wingtech, Huaqin and Longcheer – grew to 76% in 1H 2020, compared to 62% in 2018 and 68% in 2019. In 1H 2020, Huaqin smartphone shipments grew 84% YoY and reached the highest-ever market share of near 34%. Huaqin has become a key supplier for Samsung since 2H 2019 and has developed a diversified client portfolio covering top-tier companies from both China and abroad.
Shipments of Huaqin outperformed Wingtech in 2020 due to its strength in manufacturing capacity and product development efficiency. Wingtech smartphone shipments grew 9% YoY in 1H 2020, thanks to an increase in orders from Samsung and OPPO/realme. Due to the limitations related to its internal resources, Wingtech had to downsize the cooperation with Xiaomi, shifting focus to projects from Samsung and OPPO. To regain its competitive strength, Wingtech endeavors to globalize its delivery system and ramp up manufacturing capacities in its new factories in India and Indonesia.”
Exhibit 3: Ranking and growth of global smartphone ODM/IDH vendors
Source: Counterpoint Smartphone Global ODM/IDH Tracker, 1H 2020
Senior Analyst Ethan Qi said: “Hit by the depressed demand from key client Xiaomi following the COVID-19 pandemic, Longcheer smartphone shipments remained flat in the first half. However, as Xiaomi’s overseas sales have recovered since June, we expect Longcheer to benefit from the pent-up demand from Xiaomi in the second half. Apart from the top players, Chino-E shipments grew by over 40% YoY, thanks to an increase in orders from Moto. Tinno Mobile enjoyed 83% YoY growth on orders from Moto, HMD and overseas telecom operators. We expect the strong growth momentum of Tinno Mobile to continue through the second half. It is likely to out-perform Chino-E by the end of 2020.”
