Third-quarter 2023 shipments of smartphone application processors (AP) to Chinese handset vendors increased by 47.5% quarter-on-quarter, as inventory had dropped to healthy levels. The increase was driven by handset brand vendors' early preparation for the arrival of the second-half 2023 peak, demand from overseas markets (beyond China), and efforts by Hisilicon – Huawei's IC design arm – to push into the 5G AP market according to DIGITIMES Research's latest figures from China smartphone AP report.
In the fourth quarter of 2023, AP shipments for Chinese smartphones will decrease by 19.7% quarter-over-quarter but will increase by 14.6% compared to the same period of 2022, during which the market was hit hard by inventory correction.
With the overall economic outlook remaining bleak, the second-half 2023 peak season will only see mild sales. And without the impact of COVID-19, the handset industry will return to normal seasonal patterns: weak demand is expected during the coming off-season in the first quarter of 2024, which means that AP shipments for Chinese smartphones in the fourth quarter of 2023 will drop sequentially.
As for the sales of major AP vendors, although the Chinese handset vendors made early preparations for the upcoming peak season in the second half of 2023, the economic situation in China and overseas markets has not shown significant improvements, deterring consumers from buying 5G phones. Qualcomm, which has a strong focus on the 5G space, is expected to see its overall AP shipments drop by more than 20% in the fourth quarter of 2023, the report's figures show.
Although MediaTek and Unisoc face the aforementioned unfavorable factors, 4G handset sales momentum in emerging markets is expected to continue. Therefore, MediaTek's AP shipments will be better than Qualcomm's in the fourth quarter of 2023. Hisilicon's return to the 5G AP market is expected to achieve increases in shipments in the fourth quarter of 2023, driven by strong sales for Huawei's Mate 60 series handsets.
