According to recent research conducted by Canalys, the smartphone market in Southeast Asia faced a substantial setback in Q2 2023, with shipments declining by 15% year-on-year to 20.9 million units. This downturn marks the lowest shipment volume since 2014, attributed to persistently adverse macroeconomic conditions. As a consequence, vendors experienced an accumulation of older stock, curtailing new initiatives, and leading to subpar festive season sales.

This contraction in shipments signifies the sixth successive decline in growth for the Southeast Asia smartphone market. Le Xuan Chiew, an Analyst at Canalys, emphasized that brands adopted a cautious stance throughout the quarter, concentrating on reinforcing their channel positions to ensure sustained market share over the long term. Apple responded to challenges related to its non-pro iPhone 14 inventory by boosting channel incentives. Similarly, Samsung streamlined its channel inventory. The latter faced complexities due to discounted older stock disrupting pricing stability and creating product line complexity. Interestingly, Transsion was the sole vendor to achieve growth, registering a remarkable 31% increase. The vendor gained entry into the top five for the first time by strategically utilizing aggressive channel incentives, particularly focusing on Tier-2 cities. This growth was facilitated through sub-brands Infinix and Tecno, which adopted strategies such as bundling free devices and offering rebates, alongside the introduction of affordable low-end models.

Despite encountering a year-on-year drop of 26%, Samsung maintained its dominance in the Southeast Asian market, shipping 4.2 million units and securing a 20% market share. This was primarily driven by the success of its new A-series models. OPPO retained its second-place position, shipping 3.4 million units and commanding a 16% market share. The company invested efforts in enhancing the visibility of its Find and Reno series while expanding its presence through partnerships with operators, notably in markets like Malaysia and Thailand. Xiaomi and Transsion both shipped 2.9 million units, each capturing 14% market share. Xiaomi leveraged the launch of its Redmi Note 12 series to fuel volume. Transsion capitalized on market expansion in Malaysia, Thailand, and Indonesia, solidifying its market leadership in the Philippines. realme regained the fifth spot by shipping 2.6 million units and achieving a 12% market share, driven by the success of its new C-series releases.

Chiew further highlighted that in Q2 2023, the surge in 5G adoption in markets with a telco-centric focus, like Thailand and Malaysia, provided some momentum to the industry. Despite year-on-year declines of 7% and 11%, respectively, in these markets, the growing presence of telco channels mitigated the decline. The affordability of 5G devices remained pivotal for sustaining market share in telco-driven regions. Brands like Samsung, OPPO, and vivo capitalized on this trend with specific models. Conversely, markets such as Indonesia and the Philippines experienced 13% and 18% drops, respectively. Brands in these markets needed to support their channel partners as excessive inventory pressures compelled retailers to sell at a loss to make space for new stock. Vietnam, being significantly export-oriented, faced a steep 24% decline in shipments due to its exposure to the global economic deceleration.

Sheng Win Chow, an Analyst at Canalys, anticipated that the market would regain momentum in H2 2023 as channel inventory returns to healthier levels. Incentive programs and the launch of high-end devices are expected to invigorate retail sales from Q3 2023 onwards. The Southeast Asian market’s long-term outlook remains promising, with Canalys projecting mid-single-digit growth for 2024. The expansion of the online sales channel is expected to play a pivotal role in future growth. Enhanced infrastructure investments, improved payment systems, and efficient logistics will empower e-retailers to scale more effectively. Increased marketing expenditures are predicted to boost demand by enabling more aggressive pricing strategies. Furthermore, the rising disposable income within the expanding middle class and the entrance of a young workforce into the job market provide compelling reasons to anticipate an improved landscape for the region.