Track Hyper | National subsidies boost mobile phone sales: How will the market evolve?

Starting from January 20, 2025, the national subsidy for mobile phones officially launches.

This policy, announced by the National Development and Reform Commission (NDRC) on January 8 this year, introduces a new subsidy scheme for digital products, including mobile phones, tablets, and smartwatches (including wristbands). Each product category can enjoy a price subsidy of 15%, with a maximum of 500 yuan per item.

From January 20, users in Zhejiang and Jiangsu provinces can enjoy a 15% direct subsidy on the sales price when purchasing mobile phones, tablets, smartwatches, and other digital products on the Tmall platform. Provinces such as Guangdong, Shanghai, Hainan, Chongqing, Shanxi, Jilin, Fujian, Sichuan, and Inner Mongolia are gradually launching the program.

This includes government subsidies for smartphone brands such as Huawei, Xiaomi, OPPO, OnePlus, vivo, and Honor. For example, the Xiaomi 15 with 12GB+256GB version, after a subsidy of 500 yuan, has a national subsidy price of 3999 yuan, and can also enjoy 24 months of interest-free payments.

According to a research report released by Goldman Sachs, smartphones priced between 3300 yuan and 6000 yuan are expected to benefit the most, with Xiaomi Corporation anticipated to be one of the main beneficiaries.

The Goldman Sachs report points out that Apple and Huawei have entered the competition in the 4000 yuan to 6000 yuan price range. Considering the subsidy plan and the price reductions from smartphone OEMs, this may lead to intensified price competition.

Goldman Sachs believes that Xiaomi's smartphone products have strong cyclicality, contributing to long-term business growth and profitability with high sustainability, and are expected to benefit from potential increases in smartphone sales.

According to Wall Street Journal, the Xiaomi 15 series smartphones have been very popular in the market since their launch, with total sales growing rapidly. The Xiaomi 15 series is primarily manufactured by a domestic listed company, with the remaining portion produced by Xiaomi itself.

The new policy stipulates that only smartphones priced below 6000 yuan can enjoy subsidies. To meet this standard, major smartphone manufacturers are collaborating with distribution channels to adjust pricing or promotional activities to bring more flagship models into the subsidy range.

A report released by Counterpoint Research on January 21 predicts that, stimulated by the subsidy benefits, some users who originally planned to purchase devices later in 2025 may choose to upgrade their devices early, significantly boosting sales of models priced between 3000 yuan and 5000 yuan.

What is the actual market response?

According to JD.com, on the first day of the national subsidy launch, the subsidy activities in Beijing, Hubei, Jiangsu, Zhejiang, and Shaanxi were fully online. Data shows that as of noon on January 20, the sales of mobile phone products in regions where the national subsidy was launched increased by 200% month-on-month, tablets by 300%, and smart children's watches by 100%; smartphones priced between 3000 yuan and 4000 yuan were the best sellers.

Although the subsidy policy is beneficial for quickly clearing existing inventory in the market and will accelerate consumers' upgrade cycles, leaving sales space for subsequent new products, the Counterpoint report points out that caution is needed. If this round of subsidies has prematurely exhausted future consumer demand, the market may face a significant demand decline after the subsidy period ends, leading to a slowdown in sales growth in the second half of 2025 Due to the fact that this national subsidy is a one-time policy, although it will lead to a short-term surge in replacement demand, consumers' replacement habits and product choices will still be primarily driven by their own needs and product innovation. The policy is unlikely to fundamentally change the current replacement cycle in China's smartphone market.

The Counterpoint report believes that "the nationwide stimulus policy is expected to contribute an additional approximately 2% increase to the market by 2025. However, the overall demand in the Chinese market remains under pressure, and we still tend to believe that the smartphone shipments in China in 2025 will not exceed 300 million units, which still differs from some more optimistic market forecasts."

If we estimate the total annual sales of new smartphones in the Chinese market to be around 250 million to 280 million units, a 2% increase would amount to approximately 5 million to 5.6 million units. If this incremental increase is taken into account, the total scale of the Chinese smartphone market in 2025 indeed cannot exceed 300 million units.

The Counterpoint report points out that "while the subsidy policy has intensified short-term competition, it has not substantially changed the market share pattern among major brands. After the subsidies end, market growth will still return to a driven model of normalized promotions and product innovation."