The overall growth rate of the TWS headset market has returned to flat

In 2022, a recession in the global smartphone market is almost a foregone conclusion. On June 2, the International Data Agency IDC released a report saying that global smartphone shipments are expected to decrease by 3.5% in 2022 to 1.31 billion units.

IDC analysts noted that the smartphone industry is facing growing negative impacts from a combination of weak demand, inflation, ongoing geopolitical tensions, and ongoing supply chain constraints.

In fact, it is not only the smartphone market that has been hit, but the TWS earphone market, which has rapidly expanded its market size in recent years, is also facing the test of the environment.

The overall growth rate returns to the flat

Although the rise of TWS earphones originated from the release of the first Airpods in 2016, the real entry into the stage of explosive growth began in 2018, when the global TWS earphone market shipped only about 50 million pairs. By 2021, That figure has soared to 310 million. In just three years, it has grown more than 6 times.

In the early stage of the market outbreak, the brands and the white-brand industry chain basically gained a lot, and then as brand manufacturers increased their efforts to seize market share and more actively cracked down on copycat white brands, the vast majority of small and medium-sized enterprises gradually exited the market, leaving behind The brand camp represented by Apple, Android and a small number of professional audio manufacturers continued to fight.

Although the biggest winner so far is still Apple and its supply chain, the situation of making a lot of money has changed significantly from 2021.

As one of the main OEMs of Airpods, Luxshare mentioned in its 2021 financial report: "After experiencing the strong demand for smart acoustic wearable products from the industry/market and consumers, in 2021, the company's smart acoustic wearable products will be shipped. The situation has undergone a significant correction, which will have a periodical impact on the company's year-on-year operating income and net profit in this business, and it is expected that the development of this business module will gradually stabilize as a whole in 2022."

Not only that but the same feedback was also shown in the Android camp supply chain.

On the evening of June 1, Furi Electronics announced that due to the current fierce competition in the TWS headset industry, the annual growth rate of the market size has declined sharply. At the same time, due to intensified competition, the gross profit margin of such products has dropped significantly. Therefore, the company decided to terminate the "TWS project" and permanently replenish the working capital with the remaining funds raised.

In this regard, industry insiders told "The rise of the TWS headset market itself is driven by several first-tier mobile phone brands, so the supply chain environment, the rules of the game, and even the development process are all like the development of the smartphone industry. In addition, the product itself has too little room to play, and the flowering period of the entire industry is also shorter, especially under the influence of factors such as the epidemic and changes in the global economic situation, which further accelerates the speed of the TWS headset market callback.”

In this context, how will the competition of major brands change?

The three camps have their own advantages

The above-mentioned industry sources pointed out that the three camps of Android, Apple, and professional audio brands have their own advantages in the current situation.

"Apple's advantage lies in its stable customer base and strong control over the supply chain. Since most of Apple's products have always been positioned as high-end, the consumer groups for which the consumption capacity is relatively stable, the economic environment is down for this part. The influence of users may be weaker, and the supply chain is more controllable, so Apple has a strong ability to resist risks."

Perhaps the right to speak in the supply chain is not strong enough, but the stable user group is also a major feature of professional audio brands.

After the market entered the outbreak period, some users had the mentality of "refusing to follow the trend", and went the opposite way, pursuing niche and high-quality brand earphone products, such as JBL, Bose, Sony, and Beats, etc. Another part is the "audio" group, and they are also loyal users of this type of brand of earphones.

Although the brand's shipment scale may not grow explosively, when the market is impacted by external negative factors, a stable user base may also be able to avoid a large-scale reduction in shipments to a certain extent.

"On the other hand, in the Android camp, thanks to the fact that the products of various price segments of the Android brand have been fully rolled out in the past two years, especially the products at the low and medium price levels, the demand is still considerable. In the case of the economic downturn, inflation and other issues have been affected. The affected users still account for the majority, which means that there will be a considerable decline in the purchasing power of users, which invisibly creates a new round of demand for low-priced products of the Android brand.”

In addition, the Android brand has made more efforts in the shopping festival this year, and it also has the opportunity to stimulate user consumption.

Based on the above, the TWS headset market may still show a growth trend this year, but it has basically bid farewell to the peak period, and it is difficult to see a high prosperity situation like 2018-2021 in the future. Not only that, because the focus of consumers' purchases may be tilted towards low- and medium-priced products, it will further stimulate price competition between industrial chains, and terminals and suppliers will be under pressure at the same time.

Looking back on the past two years, many companies have raised funds to invest in TWS headset-related projects and expand production due to the tight market conditions. The current market situation is no longer, and these companies may also have the risk of declining capacity utilization, which will increase operating costs to a certain extent and will also bring greater pressure to themselves in the above market environment.

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