iPhone Production Volume Slid 11.5 Percent in 2016

Even the crashing and burning of Samsung's Galaxy Note 7 doesn't hinder South Korean smartphone giant from taking the top spot in marketshare.

Production of Android and other smartphones for the global market continued to grow at a modest clip in 2016, but this wasn't the case for Apple iOS phones.

Researcher TrendForce reported Jan. 25 that global smartphone production volume for 2016 grew 4.7 percent annually to reach 1.36 billion units in total. Apple, on the other hand, saw its production fall by 11.5 percent.

Samsung, with 23 percent marketshare, continued to top the annual global ranking despite the discontinuation of literally hot Galaxy Note 7. Samsung suffered a decline of 3.3 percent compared to its 2015 total, mainly because a high number of the Note 7 phones were set aflame by faulty batteries.

Apple is No. 2 with 15.3 percent share. Chinese brands Huawei, OPPO and Vivo, respectively, occupied the last three spots in the global marketshare top five and followed closely behind Apple.

iPhone 'Lacked Innovation' in 2016

iPhone production volume dropped 11.5 percent from 2015 to 2016 to 209 million units in 2016. "The general reception to the two iPhone releases last year–iPhone 7 and 7 Plus–was average at best, because both models lacked innovations that excited consumers," TrendForce said in its report.

Though Apple was second place in 2016 ranking with 15.3 percent of the global market share, the marketshare difference with the third-place Huawei was just around five percentage points.

The general market expectation for 2017 is that the next iPhone release, which is the 10th anniversary edition (currently labeled iPhone 8 and reputed to have augmented reality capabilities), will shoulder the burden of driving sales for Apple. However, TrendForce's latest projection indicates single-digit growth for this year's iPhone production volume.

There's no question about it: Samsung had a difficult 2016 in the smartphone market, even though it is No. 1 in sales. The company did not achieve its annual shipment target due to the fallout from the battery defect in Galaxy Note 7.

Galaxy Note 7 Debacle Hurt Samsung Big Time

Samsung's global market share slid from 28 percent in 2014 to 25 percent in 2015 to 23 percent by the end of 2016. TrendForce attributed much of the market share loss to the Note 7 debacle and stiff competition from Chinese brands across all market segments, from high-end to mid-range and low-end models.

TrendForce anticipates that Samsung's smartphone business will keep struggling this year and will likely post another drop in the annual production volume.

TrendForce reported that the total production volume of all Chinese brands for 2016 was 629 million units, surpassing the volume of 519 million units jointly from Apple and Samsung. Chinese smartphone makers together are expected to account for about 50 percent of the global market in 2017, posing even greater challenges to other international brands.

Huawei's heavy investments on R&D, particularly within its chip subsidiary HiSilicon, continue to pay dividends in terms of obtaining in-house application processors and the accumulation of IPs. The Chinese brands therefore have the strength to expand into overseas markets with products of comparable qualities to those from its international competitors.

Huawei Climbing the Charts

At the same time, it is able to avoid legal challenges to its technology patents. Huawei currently uses in-house, Kirin-series application processors for all its high-end devices and continues to work with Qualcomm and MediaTek in the mid-range and low-end device segments. After surpassing the 100 million mark in 2015, Huawei's production volume increased by 21.3 percent annually in 2016 to reach 131 million units, giving the brand a secured third-place spot in the ranking.

OPPO and Vivo are two Chinese smartphone brands that burst into the market in 2016 with successful sales strategies and higher product specifications. Added together, OPPO and Vivo's production volume for last year amounted to 180 million units. Furthermore, OPPO and Vivo respectively displaced Lenovo and Xiaomi to take the fourth and fifth place in the worldwide ranking.

The return of Nokia-branded products in the smartphone market is going to be one of the highly anticipated events in the early 2017. Last May, Foxconn's subsidiary FIH Mobile acquired the Nokia brand and its mobile phone business from Microsoft and at the same time entered a brand licensing and patent agreement with HMD Global Oy (HMD).

Supported by Foxconn's vast resources, Nokia is expected to release a new device at the start of this year, generating new buzz in the market.

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor of Features & Analysis at eWEEK, responsible in large part for the publication's coverage areas. In his 12 years and more than 3,900 stories at eWEEK, he...