China smartphone AP shipments, 3Q 2023

According to DIGITIMES Research, 3Q23 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 2H23 peak, demand from overseas markets (beyond China), and efforts by Hisilicon – Huawei's IC design arm – to push into the 5G AP market.

In 4Q23, 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 2H23 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 1Q24, which means that AP shipments for Chinese smartphones in 4Q23 will drop sequentially.