The global premium smartphone market ($400 and above wholesale price) average selling price (ASP) grew 8% YoY to reach $780, a second-quarter record, in Q2 2022, according to Counterpoint Research’s Market Pulse Service. This was mainly driven by the 94% YoY sales growth in the $1,000 and above price segment. premium phones

The segment alone contributed to over one-fourth of premium smartphone sales and over a fifth of global smartphone revenues in Q2 2022. The growth of the segment also drove the global smartphone ASP to its highest second quarter ever.

Source: Counterpoint’s Global Monthly Handset Model Sales (Sell-through) Tracker, August 2022

Commenting on the growth of the $1,000 and above price segment, Senior Analyst Varun Mishra said, “As 5G is becoming more prevalent, consumers are upgrading their devices. This is especially significant, as the large installed base of premium iPhone users upgrades to 5G. Apple’s sales grew 114% YoY, capturing over 78% of the $1,000 and above price segment. Consumers whose finances were not affected by the pandemic have been using the extra disposable income created due to restricted travel to buy more expensive devices, including smartphones. During the pandemic, users also realized the importance of smartphones and started seeing more value in upgrading their devices. Another interesting factor is that this trend in the ultra-premium market is ubiquitous across regions, despite inflationary pressures. This is because affluent consumers are not affected by the current economic headwinds. Hence, the low-to-mid-price segment has been hit hard by the recent macro headwinds while the high-price segment still looks solid, further boosting the ASPs.  Also, the increasing number of financing schemes and a growing ecosystem of trade-ins and EMIs are also helping consumers to upgrade their devices without paying the total price upfront.” 

Premium market’s revenue contribution to the overall smartphone market increased to 60% in Q2 2022 premium phones

The segment’s growth has also helped in arresting revenue declines. Despite the unit sales decline, global premium smartphone market revenues remained flat YoY. As lower price tiers got affected more by inflationary pressures, the premium market’s revenue contribution to the overall smartphone market increased to 60% in Q2 2022 from 58% in Q1 2022.

In terms of volumes, sales in the premium segment declined 8% YoY in Q2 2022 but performed better than the overall smartphone market, which declined 12%. This is the ninth consecutive quarter in which the premium market has outperformed overall smartphone market growth.

Apple still in lead

Apple continued to lead the premium segment with a 57% share as the 4G iOS installed base continued to upgrade. Sales and promotions in the US remained strong through the quarter. There was no evidence of any macroeconomic impact on demand. Apple also continued to successfully onboard new users as switcher growth hit a fresh record during the quarter, largely driven by robust growth in emerging economies.

Global Premium (>$400) Smartphone Sales Share by OEM, Q2 2021 vs Q2 2022

Source: Counterpoint’s Global Monthly Handset Model Sales (Sell-through) Tracker

Samsung’s sales grew 2% YoY and its share also increased as the S22 Ultra continued to be the best-selling Android smartphone in the premium segment for the second consecutive quarter.

The share of Chinese OEMs OPPO, Xiaomi and Huawei declined as their home market struggled through Q2 2022, clocking the lowest quarterly sales since Q4 2012. However, vivo’s sales grew 59% YoY as it surpassed OPPO to become the third largest premium smartphone brand in Q2 2022 for the first time ever. Most of this growth came from China, driven by the X80, S15 and iQOO 9 series. vivo also became the second largest premium smartphone brand in China for the first time ever. It was also the largest smartphone OEM in China in the affordable premium segment ($400-$699), driven by the X80 series. 

Honor is a rapidly growing premium phones

The increase in the share of “Others” brands was mainly driven by HONOR. The brand has been rapidly expanding in China over the last few quarters. The HONOR 70 was its best-selling model in the premium segment, followed by the Magic 4. The overseas markets’ contribution to HONOR’s sales is also likely to increase as the brand enters new geographies.

Going forward, the premium segment is likely to continue to outpace the global smartphone market. Commenting on the outlook, Research Director Tarun Pathaksaid, “The second half of the year will also be marked by key launches like the new Fold series from Samsung and the new iPhone series from Apple, which are likely to drive growth in the premium segment. Chinese OEMs will also start to bring their foldable devices to the global markets, further expanding the premium market portfolio. Higher BoM and operational costs backed by the raw material prices remaining high, growing inflation, and volatility in foreign exchange rates have been putting further pressure on OEMs to maintain profitability, which will be reflected in the growing ASPs. All these factors will keep on driving the ASPs high in 2022. We believe the premiumization trend has already started across several markets, and it is here to say.” premium phones

Notes: The analysis is based on wholesale ASPs. OPPO includes OnePlus and vivo includes IQOO.