First-tier China-based smartphone vendors are set to continue ramping up shipments in 2018, which will bring not only more competitive pressure on international and other local brands but also accelerate the consolidation process of related supply chains in China, according to industry sources.

Huawei saw its smartphone shipments expand 10.07% on year to 153 million units in 2017 and is expected to see shipments continue growing in 2018 as the vendor has said that it will enhance its R&D to bring more AI (artificial intelligence) and AR (augmented reality) applications to smartphones in 2018.

Oppo and Xiaomi Technology are expected to ship over 100 million smartphones, respectively, in 2018, the sources estimated.

Since annual demand for smartphones in China dropped to 400 million units in 2017 from the 500 million units a year earlier due to increasing penetration, the local market is obviously no longer able to support the vendors' growths, and therefore boosting overseas sales has become a common goal of handset brands in China, said the sources.

In fact, China-based brands have continued to make ground in a number of emerging markets, leveraging their vertically integrated business models, which cover manufacturing, supply chain management, channel and brand operations, as well as products with high performance/price ratios, commented the sources.

The advancements gained by China's brands in emerging markets in recent years have caused significant consolidations in related markets as some local brands in these markets have been gradually losing their advantages because of their failure to secure competitive components from their suppliers in China for product differentiation.

MicroMax, a major local handset brand in India with a 30% market share two years ago, has seen its share sink to as low as 3% recently due to increasing presence of China-based brands, including Huawei, Xiaomi, Oppo and Vivo, in the India market, indicated the sources.

Meanwhile, the further expansion of first-tier China's brands in overseas markets will affect OEM orders from regional brands to the second- and third-tier handset makers in China, driving more suppliers out of the supply chain and accelerating the consolidation process within the handset industry in China, said the sources.