Samsung, LG, Xiaomi Increase Outsourcing
The global smartphone original design manufacturing (ODM) market grew 18 percent in 2019 as Samsung Electronics, LG Electronics, and Xiaomi outsourced more of their smartphone design and production to external manufacturers.
In 2019, the smartphone market shrank 2 percent on year, but ODM sales spiked 18 percent, said an ODM Tracker report of Counterpoint Research. The combined amount of ODM and individual design house (IDH) grew 4 percent compared to the previous year. Industry analysts say that the proportion of ODM products increased as major manufacturers continued to outsource both design and production of smartphones.
The growth of ODM and IDH markets in 2019 was led by Wingtech, Huaqin and Longcheer. The share of these three companies rose to 68 percent in 2019 from 52 percent in 2018. In particular, Wingtech took the top spot by winning orders from major manufacturers such as Samsung. In the IDH market, Xiaomi chose Longcheer instead of Wingtech, helping the former to take first place.
Huaqin went through difficulties with the expiration of a contract with its major customer, Huawei, but has enjoyed double digit growth since the second half of in 2019 by expanding the number of its customers. ODM companies such as Tinno Mobile enjoyed growth thanks to an increase in orders from mobile carriers and overseas OEM companies in 2019.
Counterpoint Research forecasts that competition between ODM and IDH companies will intensify in the future. In addition, as the smartphone market is saturated, ODM companies are expanding into the internet of things (IoT) sector.