People use their mobile phones on July 17, 2016 in Surakarta, Indonesia.

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Smartphone shipments in Southeast Asia continued to rebound in early 2024, in contrast to lulls in other regions, as the promising market for mobile device makers continues to attract more brands and investment.

The top five markets in the region shipped 7.26 million smartphones, marking a significant increase of 20% over the same period last year, according to research from technology market analysis company Canalys, published on Wednesday.

The results continue a market recovery that began in the fourth quarter of 2023, when handset shipments in Southeast Asia rose year-on-year for the first quarter in nearly two years amid a broader industry recovery from the pandemic.

According to Canalys analyst Le Xuan Chiew, stabilization of inflationary pressures, supported by government support and momentum from sales at the end of 2023 in the region, led to a recovery in consumer sentiment and spending.

“To take advantage of this market revival, smartphone makers who adopted conservative strategies over the past six months are now implementing aggressive tactics to gain market dominance,” he said in the release, noting trends such as affordable 5G, AI integration , ecosystem development and channel optimization.

In January, Samsung regained its top spot in market share in the region thanks to the successful launch of its premium S24 series, which offers increased battery life and new AI capabilities.

But Chinese competitors are focusing more on the market, gaining ground and offering new phone models at competitive prices. Xiaomi, the second largest phone brand in terms of January shipments for this region, saw year-on-year growth of 128%, while Transsion, a relative newcomer to the market, saw growth of 190%.

“The region’s increasing disposable income from a growing middle class and a young population entering the workforce are strong reasons to expect increased investment,” Chew said.

Southeast Asia’s strong smartphone shipments contrast with China, the world’s largest smartphone market, where smartphone sales fell 7% in the first six weeks of 2024 from a year earlier, according to a Tuesday report by Counterpoint Research.

While the sales decline in China was magnified by unusually high sales in early 2023, other factors held the market down, senior analyst Ivan Lam said in the report.

“Consumer confidence will need to rise to stabilize the market, but that’s a difficult decision at the moment with everything going on, especially in the property sector,” he said.

One of the casualties is Apple, whose smartphone shipments in China fell 24% in the first six weeks of the year, according to the survey. This decline is due in part to the revival of domestic rival Huawei, but also to unusually high shipments from Apple in early 2023, which resulted from earlier production delays.

However, as growth in smartphone markets such as China and the US slows, brands that sell premium phones such as Apple and Huawei are increasingly turning to emerging markets such as Southeast Asia that are poised for growth.

According to data from Canalys, the handset market in Southeast Asia is forecast to grow at a 7% annual rate in 2024, much faster than the rest of the world’s 3%. Meanwhile, China is expected to grow by 1% and the North American market is expected to remain unchanged.

According to information from Bloomberg, the first Apple retail location in Malaysia is now in the works. Meanwhile, Huawei was strengthen ties with Southeast Asian partners such as Indonesian telecommunications company Telkomsel.

In the Canalys report, Indonesia remains the largest smartphone market in Southeast Asia, accounting for 38% of shipments in January. The second largest market, the Philippines, showed the most stable growth with shipments up 77% in January compared to last year.

The next largest markets were Thailand, Vietnam and Malaysia, in that order. Vietnam was the only country to experience a year-on-year drop in shipments, down 2%.