After facing a rather difficult time during the year 2023, the smartphone market in the Southeast Asia (SEA) region has finally recovered during the first quarter of 2024. The growth rate for SEA’s smartphone market stood at 12 per cent during the first quarter ended 2024 on a year-on-year basis. Further, smartphone manufacturers shipped a total of 23.5 million units during the period. While these were still below the pre-2023 levels, they represent an improvement as compared to 2023.

Revival begins

The revival of SEA’s smartphone market began in January 2024 with smartphone shipments in the top five markets in Southeast Asia surging to 7.26 million units, marking a significant 20 per cent year-on-year increase. Riding on the momentum of strong consumer demand during year-end 2023 festivities, smartphone vendors focused on the low end began to scale their volumes. During 2023, smartphone manufacturers focused on decreasing sell-in and clearing outdated inventory, resulting in normalised inventory levels. This created opportunities for smartphone vendors to vigorously introduce new products. The key reasons for revival during January 2024, as per a Canalys report, were the stabilisation of inflationary pressures and government support that led to a resurgence in consumer sentiment and expenditure. To capitalise on this market resurgence, smartphone manufacturers, which adopted conservative strategies during the last six months of 2023, now deployed aggressive tactics to gain market dominance.

Regional trends

Indonesia accounted for 38 per cent of shipments from the SEA region, with 2.7 million units in January 2024. The country’s shipments increased by 12 per cent year on year during the period owing to increased vendor engagement, fuelled by the introduction of new products. Among smartphone vendors, Oppo reclaimed the leading position, primarily by scaling up shipments of its Ax8 series, which accounted for over 90 per cent of its total shipments. Xiaomi’s shipments grew by 30 per cent year on year, driven by the launch of new POCO models that gained traction in the online channel. The smartphone market in the Philippines remained the second largest in Southeast Asia during January 2024, with a share in shipment of 21 per cent and a total shipment of 1.5 million units. It showed the most robust recovery, with a remarkable year-on-year growth of 77 per cent. Competition at the low end intensified as Realme, Xiaomi and TRANSSION launched more budget-friendly devices with impressive core specifications, such as RAM and ROM.

TRANSSION strengthened its market presence by securing a 37 per cent market share in the Philippines in January 2024, employing aggressive channel incentives and sponsoring gaming teams to appeal to the youth and budget-conscious buyers. In response to TRANSSION’s dominance, realme introduced its Note 50 series, priced competitively below $100. In Thailand, smartphone shipments grew more modestly by 5 per cent to reach 1.3 million units due to persistent adverse economic conditions and a weakened local currency, leading to higher import expenses. To address market dynamics, many vendors expanded their product offerings to include budget-friendly 5G devices, anticipating the growing adoption of 5G technology in the country, mainly driven by accessible 5G post-paid and prepaid packages. Samsung’s and Apple’s long-standing partnerships with local operators gave them an advantage in the market.

Vietnam was the only market in the region where there was a decline in smartphone shipments by 2 per cent to 848,000 units in January 2024. The Vietnamese smartphone market recovery has been slower than anticipated. Among smartphone vendors, Xiaomi was working to reinvigorate its presence in the Vietnamese market and increased its market share from 5 per cent in January 2023 to 19 per cent in January 2024 owing to a 288 per cent growth in smartphone shipments. This growth was fuelled by the introduction of its Note 13 series, which has been attractively priced for Vietnam’s expanding middle class. Smartphone shipments in the Malaysian market increased by an impressive 33 per cent sequentially in January 2024, reaching 831,000 units. The market’s resilience is attributed to government initiatives promoting the widespread adoption of 5G technology. Among smartphone vendors, Samsung emerged as the market leader in January 2024 with a 20 per cent market share, while HONOR doubled its shipments compared to the previous year.

Trends in Q1 2024

According to an industry report, smartphone manufacturers took advantage of healthier channel inventories and improving consumer sentiment to drive growth in the first quarter of 2024. Efforts undertaken by smartphone vendors to normalise channel inventory during late 2023 also paid off during the period as sales channels were in a healthier position to take in more sell-in. Further, the Ramadan season catalysed shipment growth in markets like Indonesia and Malaysia, with spending surpassing 2023 levels due to increased Ramadan bonuses. Another factor has been the revival of the sub-$100 pricing segment in countries like the Philippines and Indonesia.

Market dynamics

According to a report by Canalys, Samsung, with a 19 per cent market share, maintained its lead in the market among the key players in the SEA market smartphone vendors with strong low-end offerings. This was despite a decline of 20 per cent in its shipment value on a year-on-year basis. TRANSSION, with its sub-brands Infinix, Tecno and iTel, secured the second spot with an 18 per cent market share and recorded an impressive 197 per cent year-on-year growth that outpaced companies like Oppo and Xiaomi. A key factor behind this growth was TRANSSION’s cobranding and partnerships with mobile gaming companies during Ramadan that resonated with the region’s young demographics. By offering affordable, high-performance gaming devices, TRANSSION successfully appealed to this market segment. Xiaomi held a market share of 16 per cent along with Oppo. However, Xiaomi’s sales increased by a substantial annualised growth rate of 52 per cent during the first quarter of 2024 while Oppo’s growth declined by 5 per cent on a year-on-year basis. Vivo captured a 12 per cent market share, registering a 12 per cent increase in sales on a year-on-year basis.

Future outlook

Going forward, industry analysts predict an overall 4 per cent total market growth in 2024. However, uncertainties surrounding fluctuating currencies, component cost and other volatile factors may stunt the market’s growth. In this scenario, smartphone vendors having an efficient supply chain and healthy inventory are expected to benefit. The long-term outlook for the Southeast Asian market is positive though. A young population and increasingly democratised digital financial services are strong markers for growth in consumer spending and is likely to spur an increase in demand for premium devices in the coming years. For smartphone vendors in the region, it is imperative to seek out new avenues for growth, with emerging trends such as affordable 5G smartphones, artificial intelligence integration, ecosystem development and channel optimisation becoming the primary drivers of industry evolution in the region. n