The market growth rate is 4.6%, slightly growing compared to the previous year, and the maturity stage is in full swing.

The smartphone market next year is expected to see growth in the Indian market, while advanced markets and the Chinese market are expected to slow down.

At the System Semiconductor Forum hosted by the Korea Semiconductor Industry Association, Park Won-jae, an analyst at Daewoo Securities, said, “The U.S. and Western European markets, which had been driving smartphone growth, are beginning to see a full-blown slowdown, and the Chinese market, which had been the main driver of smartphone market expansion, is also beginning to see a slowdown,” adding, “Growth centered on India is expected in the future.”

In this way, the smartphone market in 2017 is expected to be decorated with keywords such as full-fledged maturity and intensifying competition, with sales volume reaching 1.53 billion units. In 2016, handset shipments are expected to decline to 1.95 billion units, while smartphone shipments are expected to reach 1.46 billion units in 2016, following 1.3 billion units in 2014 and 1.44 billion units in 2015.


▲Consumers who visited the 'Galaxy S7 Edge' Blue Coral and 'Gear S3' experience zone are examining the products.

Analyst Park Won-jae said, “The smartphone market in 2017 will enter a full-fledged maturity phase with a slight increase of 4.6% compared to the previous year,” and “The double whammy of domestic companies is expected to accelerate due to the solid Apple and aggressive China.”

This year, the expansion of the mid-to-low-end market and the growth of Chinese companies were hot topics in the smartphone market. Chinese online and offline companies such as Huawei, Oppo, and Vivo grew on the back of Samsung’s Galaxy Note 7 and Apple’s sluggish performance, and the Indian market also continued to show double-digit growth rates (11.3%).

Concerns over overcapacity in the parts industry

In addition, it is evaluated that the parts industry has become more competitive and differentiated due to lower unit prices this year. The slowdown in smartphone growth and the increase in low- to mid-priced products have made the business environment for parts companies difficult. In other words, differentiation is becoming more serious due to new functions such as metal cases, wireless charging, iris recognition, and waterproofing and dustproofing, as well as advanced technologies such as camera modules and connectors, and the overproduction capacity of the parts industry continues to cause difficulties.

The smartphone market is expected to experience a period of maturity and decline after next year. The mid-to-low-priced product line is expected to shift its growth axis to the Chinese, Indian, and South American markets due to brand competitiveness, economies of scale, and cost efficiency. Samsung Electronics expects the launch of the Galaxy S8 to be a turning point for stabilizing smartphone competitiveness, and growth is expected to come from semiconductors, parts, and materials.

▲Huawei's 'H' smartphone with enhanced display and cost-effectiveness

Apple's moves and the differentiation of Chinese companies are also interesting to watch. 2017 is the 10th anniversary of the iPhone, and attention is being paid to what the icon of innovation, the iPhone (iPhon 8), will look like. It seems inevitable that Chinese companies will compete with each other as they face the reality of slowing growth. The survival competition among Chinese smartphone companies that have sprung up like mushrooms is expected to have a significant impact on the Chinese smartphone market.

The problem is that the market landscape is likely to fluctuate depending on how domestic companies respond in this rapidly changing smartphone market. In the rapidly commoditizing smartphone market, the strong supply chain effect of Korean IT companies is noteworthy. This is because the competitiveness of the supply chain of products, parts, and materials is also an important factor in an environment where they must respond quickly to customer demands and release inexpensive products. As seen in the cases where countries that were IT powerhouses developed from IT products to parts and then materials/equipment, the prediction that the parts industry will become an important axis of the IT industry in the future is gaining more strength.

Analyst Park Won-jae said, “Advanced markets are already saturated, and most of the demand is replacement demand, and future growth is likely to occur in emerging markets focused on the mid- to low-end.” He added, “Apple is exerting a strong influence in the high-end market, and Chinese companies have grown in the mid- to low-end market. We need to respond to risk factors that are growing as much as opportunities.”