Outsourced Smartwatch Manufacturing Now Accounts for 69% of Global Shipments

Smartwatches are starting to take the world by storm, and they are providing excellent opportunities for outsourced manufacturing concerns. Around 69% of the total global shipments for smartwatches now come from outsourced manufacturers as of the second half of 2022, and this represents a 15% increase year over year with all things having been considered and taken into account. Just a year ago, 63% of smartwatch shipments came from ODMs, so there has been a 6 point uptick so far.

Much of this growth can be contributed to Indian brands such as boAt, Noise as well as Fire-Bolt. In spite of the fact that this is the case, the biggest players in the industry continue to be Chinese, with Luxshare in particular seeing a tremendous amount of growth. This ODM now manufactures around 40% of Apples smartwatches, and accounts for 21% of total shipments. However, its sales in the second half of 2022 were flat when compared to last year, which means that the company failed to grow.

Coming in second is Foxconn with 16%, and Compal follows in third place with a 12% share. These are the only companies that have double digit shares of the overall industry. Foxconn has been growing at a faster rate than some of its competitors, which allowed it to obtain the coveted second place ranking in this list.

The growth trend is expected to continue, with outsourced manufacturing predicted to surpass the 70% share mark in 2023. Such changes might be concerning because of the fact that this is the sort of thing that could potentially end up upsetting the balance of the industry, but Apple’s emphasis on outsourcing means that these companies still have a lot of room for growth.

Indian companies are making a lot of headway, but they are still falling short of their Chinese counterparts. As competition becomes ever greater, Chinese companies will want to maintain their edge. However, with the Chinese labor force becoming more expensive, Indian companies may be able to see some tremendous growth in the next decade which could put them ahead of China for the very first time.

H/T: CounterPointResearch

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