The mobile phone market has entered an era of innovation and excitement.
In late September, Xiaomi launched the Mi 17 series. As expected, the ingenious rear - screen design led to polarized evaluations on social media. It was initially thought to be just a creative stunt by Xiaomi, but unexpectedly, it was just the appetizer for the industry's innovation competition.
One month later, realme, a sub - brand of OPPO, released the GT8 series, offering four different decorative part assembly options for the camera module.
The mechanical assembly design of the Realme GT8 series
Coincidentally, around the same time, Honor launched the robot phone, also focusing on the camera module. It incorporated a complete mechanical gimbal into the phone, which was extremely cool. If it were Apple that launched such a product, Tim Cook would probably say "only Apple can do" five times, and it would generate at least ten hot topics on Weibo.
However, the robot phone is currently in the concept stage, and the official statement is that it will go into mass production next year.
The design concept of Honor's robot phone
Where there is single - digit growth, there is innovation. The various stunts by terminal manufacturers are not only a reflection of the intense competition after the market structure has been solidified for years but also a phased result of the game between terminals and the supply chain in terms of discourse power.
Apple Did It Too
The first entrant in this innovation competition was actually Apple's iPhone Air.
Also focusing on the phone's form factor, the iPhone Air achieved near - extreme thinness and lightness through extreme miniaturization and integration of components. However, the configuration was comprehensively downgraded, and the pricing did not match the paper specifications at all.
Although the iPhone Air is generally considered the successor to the Plus series, its "direct relative" is actually the quietly launched iPhone 16e at the beginning of the year.
Apple's temporary models usually have a mission. The iPhone 16e is positioned as a "showroom for self - developed technologies." Since it is equipped with Apple's first self - developed 5G baseband chip C1, the proportion of self - developed components in the total BOM cost of the iPhone 16e reached a record high of 40%.
The proportion of self - developed components in the BOM cost of three Apple models
As the successor, the iPhone Air not only features the iterative version C1X of the C1 but also integrates the self - developed Wi - Fi chip N1, reaching a new high in self - development.
However, their market positions are completely opposite. The iPhone 16e was launched at a price of 4,499 yuan, which is quite affordable in Apple's product line. In contrast, the successor iPhone Air has a price increase to 7,999 yuan.
In addition to paving the way for self - developed solutions, the iPhone Air, which "sacrifices configuration for thinness," may also hide another intention of Apple: to test the consumer market's acceptance of "appearance premium."
For a long time, Apple has maintained a structural gap in product experience with the Android camp through the differentiation of software and hardware represented by the A - series processors and the iOS system. Although the market share of the iPhone has never exceeded 30%, it can generate disproportionate profit margins.
However, in the past few years, the gap in software and hardware parameters between the two sides has gradually narrowed, and the narrative of "iOS + 8G > 16G" that maintained the iPhone's profit margin has begun to collapse. Apple's decision to use the same advanced components as Android in the iPhone 17 series is a response to market pressure.
In this context, the problem of product homogenization within the Android camp has spread to the entire smartphone market. Chinese manufacturers aim for high - end positioning, while Apple aims to maintain the iPhone's profit margin. However, their means converge: to explore new directions for differentiation.
Two paths have emerged:
Firstly, find product form innovation acceptable to the market. The thinness of the iPhone Air, the rear - screen of the Mi 17, and the concept - stage robot phone are all ways to explore new premium spaces through new product design ideas.
Since the front screen and the internal space for the battery are crucial for the basic functional experience and cannot be messed up by designers, everyone tacitly focuses on the camera module for creative design.
Secondly, strengthen vertical integration. Self - develop what can be developed independently and jointly develop what cannot. The goal is to master the uniqueness of core components and translate it into product - level differentiation.
In the past few years, apart from the continuous self - development debates on Weibo, "technology branding" has been the most prominent feature of the market.
From vivo's "Blue Ocean Battery," OnePlus's "Glacial Battery" to Honor's "Qinghai Lake Battery" and Xiaomi's "Jinsha River Battery," they all share the same underlying technology: silicon - carbon batteries.
During the almost simultaneous folding - phone competition, the hinge became the most contested area. OPPO has the "Waterdrop Hinge," Huawei has the "Waterdrop Hinge," and Xiaomi has the "Keel Hinge."
Whether it is the expansion of self - development or the components named after famous mountains and rivers, they all represent a relatively abnormal trend in the smartphone market: brands are seizing power from suppliers.
Inspiration from MediaTek
In 2013, Lu Xiangzheng, then the general manager of MediaTek in China, said in an interview that the more mature an industry is, the more it emphasizes the importance of industrial division of labor, and the smartphone industry is no exception [5].
Although MediaTek has its own interests at stake, Lu Xiangzheng's statement represented the mainstream view in the industry at that time. Take the PC and feature - phone industries in the consumer electronics sector as examples; they are both representatives of horizontal division of labor in manufacturing.
Most new technologies go through a cycle of "shortage - maturity - oversupply." As the technology route converges and core technologies solidify, the technology premium gradually disappears, and suppliers take over the R & D and production of components, resulting in what is called a "mature supply chain."
At this time, the industrial chain shifts from vertical integration to horizontal division of labor. Terminal manufacturers no longer take on everything, and suppliers are responsible for the R & D and production of various components.
During the feature - phone era, MediaTek was the biggest beneficiary of horizontal division of labor. Its "turn key" solution integrated multiple types of chips into one chip. Coupled with a development platform, phone manufacturers only needed to purchase MediaTek's solution, add a casing and a camera, and they could produce phones. This made MediaTek the world's largest semiconductor company.
The turn - key solution is the ultimate product of horizontal division of labor in the industry and was once the development trend of smartphones.
At the launch of the Xiaomi 4 in 2014, Lei Jun emotionally shared his battle friendship with Foxconn and thanked the executives of various suppliers on stage. Along with the logos of the four major suppliers on the PPT, the scene was warm and harmonious.
A well - structured supplier system and an orderly division of labor are signs of an industry's maturity. Thanking suppliers was also the finale of phone launch events at that time. However, a high degree of horizontal division of labor also has pitfalls: the "definition right" of products is actually in the hands of suppliers.
Most consumer electronics products are the result of "system integration," which means integrating multiple subsystems through technical coupling to work together to achieve specific technical goals.
PC is the simplest form of system integration, so simple that only a screwdriver is needed. Due to the openness and compatibility of PCs, from motherboard slots to screw interfaces are highly standardized. You only need to buy the corresponding components to assemble a computer.
However, precisely because of the standardization and universality, the "definition right" and added value of PCs are actually in the hands of component suppliers such as Intel, AMD, and Micron. Therefore, although Lenovo is the world's largest PC manufacturer, its market value is only 10% of Intel's, 8% of Micron's, and 4% of AMD's.
Phones have a higher degree of integration and precision and are no longer in the category of DIY. A large aircraft involves the assembly of hundreds of thousands of components and represents the highest - level system integration ability. Therefore, Boeing does not produce any core components, including engines, but has few competitors.
MediaTek's turn - key solution actually means that MediaTek completes the "system integration" step and takes away the "definition right" of phones, turning phone manufacturers into literal assembly plants.
In 2018, Luo Yonghao, who was still at Smartisan, attended a live - streaming event and left a remark that will be recorded in the history of the Chinese phone industry: "It's all supplied by suppliers. Who are you pretending to be?"
This statement is relatively extreme. After all, the components of lithography machines are also supplied by suppliers. However, the competition for the "definition right" was indeed a major concern for phone manufacturers at that time.
During the competition for the first - to - market of 5G phones in 2019, it once turned into a competition for the first - to - market of Qualcomm's Snapdragon X50. Unfortunately, China's 5G commercial license had not been issued yet, so the main battlefield shifted to Europe.
Compared with its competitors that launched Qualcomm - equipped phones first, Huawei, which used its own 5G baseband, was quite calm. The Ministry of Industry and Information Technology issued the 5G commercial license in June, and the Mate 20 X 5G, equipped with the self - developed Balong 5000, was launched in August.
Huawei Mate 20 X 5G
Frightened by the turn - key solution and inspired by the examples of Apple and Huawei, the trend of horizontal division of labor in the phone market came to an end, and everyone tacitly resumed vertical integration.
Your Whole Family Are Assembly Plants
In 2009, Tim Cook took over as the interim CEO while Steve Jobs was ill. In his inauguration speech, he openly expressed his ambition for the supply chain: "We believe that we need to own and control the main technologies behind the products we manufacture."
The following year, Apple's self - developed A4 chip was launched, and Cook, with a supply - chain background, began to build the most extensive and well - ordered supply - chain empire in history.
When dealing with suppliers, Apple is willing to generously provide equipment worth millions and teach suppliers new production technologies step by step. At the same time, it selectively "works in isolation" and keeps core technology solutions such as chips and operating systems tightly locked at the company's headquarters.
Apple is not the phone brand with the highest degree of vertical integration, but it is definitely the brand with the deepest control over the supply chain. The core lies in the "definition right" of technology solutions.
Samsung can produce almost all core components, including processors, screens, memory, and CIS chips. However, since these components are supplied externally and are highly universal, they are not conducive to product differentiation.
Apple does not directly research and produce components but sets technical goals and uses generous orders and profits to guide the supply - chain army to research and produce. It provides technical support, helps with equipment, and prohibits the production line from being used by others. This approach is called "joint research and development."
In March 2022, Apple launched the M1 Ultra chip, which is actually two M1 Max chips "stitched" together. Apple dedicated a small section in the press release to explain the "stitching technology" called UltraFusion.
True marketing for tech enthusiasts
It may sound like an Apple R & D achievement. However, according to the patents and papers of Apple and TSMC, UltraFusion actually comes from TSMC's CoWoS Chiplet packaging solution. Apple adjusts the design according to TSMC's technical architecture, and TSMC improves the solution according to Apple's parameter indicators. This is "joint research and development."
Using the analogy of building blocks, "all supplied by suppliers" can be understood as suppliers providing standardized building blocks, and terminal manufacturers can assemble them into different objects. However, no matter how creative the terminal manufacturers are, the form of the finished product cannot go beyond the framework of the building blocks.
"Joint research and development" is similar to the terminal brand first defining the final form of the finished product, and the supplier customizing the specific building - block solution, thus creating product differentiation.
In this process, the terminal brand will gradually increase the proportion of its own technical solutions and finally obtain the "definition right" of components.
Of course, whether it is "self - development" or "joint research and development," it can be equated with the "value investment" constantly advocated by fund managers. Self - development does not necessarily mean better parameters, and value investment has nothing to do with product performance. The core lies in whether the terminal brand can avoid homogeneous product competition through control over the supply chain.
In the relationship between the upstream and downstream of the electronics industry, the one with higher market concentration has more power. After years of integration and consolidation, the smartphone market is divided among several giants, and their bargaining power against the supply chain will objectively increase.
Precisely because of the stable market structure and stagnant growth