Is China’s smartphone ‘hypergrowth’ over?

Author

Leon Siciliano video source Bloomberg

November 11, 2014

The era of hypergrowth in China’s smartphone market is coming to an end says Lenovo after posting its slowest sales growth in six months

Lenovo Group Ltd. said the era of “hypergrowth” is over in China’s smartphone market after the company reported its slowest sales growth in six quarters.

Shares fell to their lowest since June 24 after Lenovo’s revenue rose 7.2pc in the three months ended September, the smallest increase since March 2013 and missing analysts’ estimates. Lenovo was the biggest decliner today on Hong Kong’s benchmark Hang Seng Index.

Chief Executive Officer Yang Yuanqing has expanded in computer servers and mobile phones, including the $2.91bn purchase of Motorola Mobility, to help combat a shrinking personal-computer market. Growth in China is slowing amid intensifying competition from local smartphone producers, including Xiaomi Corp., which surpassed Lenovo and became the third-biggest global vendor in the quarter ending in September.

“The industry is changing from in the past, when China grew much faster than the rest of the world,” Yang said in an interview. “The market is changing and China will not see further hypergrowth.”

Lenovo shares fell 4.8pc to HK$10.26 at the close of trade in Hong Kong, adding to a 5.1pc drop yesterday that was the biggest decline since Feb. 4.

Chinese producers have packed high-end features into cheaper smartphones to drive growth. Lenovo boosted global smartphone shipments by 38pc in the quarter to 16.9m units, ranking it fourth behind Samsung Electronics Co., Apple Inc. and Xiaomi, researcher International Data Corp. said Oct. 29.

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