China smartphone shipments rebounded in March on a MoM basis, but YoY remained dragged by memory cost pressures

Overview

This report tracks March shipments in China’s smartphone market, 5G penetration, new model launches, and changes in camera specifications. The core conclusion is that shipments recovered meaningfully on a month-over-month basis in March after the Lunar New Year, but remained negative year over year; 5G smartphone penetration stayed high; and rising memory costs plus seasonality may continue to weigh on demand in 2Q26. At the same time, Goldman Sachs believes camera counts have come down from historical highs, but the share of high-megapixel cameras continues to rise, reflecting the direction of smartphone specification upgrades.

Core views

China smartphone shipments were about 20 million units in March, down 6% YoY and up 24% MoM, while 1Q26 shipments declined 12% YoY. Goldman Sachs expects 2Q26 shipments to decline 6% YoY, as seasonality and rising memory costs constrain end-demand. 5G smartphone shipments were about 20 million units, up slightly 1% YoY, with penetration reaching 93%. At the product level, new models such as Huawei Pura X Max and Oppo Find X9 Ultra showcased upgrade directions including foldables, flagship imaging, AI assistants, and high-spec cameras.

Analysis framework

The report mainly combines monthly industry data tracking with product specification teardowns: on one hand, it cites MIIT data to analyze China smartphone and 5G smartphone shipments, the number of new model launches, and penetration rates; on the other hand, it counts camera quantities and pixel mix for models launched year to date in 2026 by brands such as Honor, Xiaomi, OPPO, Vivo, and Transsion to assess trends in specification upgrades.

Methodology notes

• industry_trackingMIIT shipment and model-launch tracking

  Monthly shipment and new model launch tracking

  Using MIIT-disclosed monthly shipment volumes, new model counts, and penetration rates for China smartphones and 5G smartphones to assess industry demand and product launch cadence.

• product_spec_analysisSmartphone camera specification analysis

  Camera specification teardown

  Counting camera quantities and pixel distribution of newly launched models from major China smartphone brands to observe the declining share of low-megapixel cameras and the rising share of 20MPx+ cameras.

• equity_research_frameworkGS Factor Profile

  Goldman Sachs factor profile

  The Goldman Sachs factor profile compares stocks versus the market and industry peers across growth, financial returns, valuation multiples, and composite indicators, but the main body of this report does not focus on single-stock factor scoring.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Hon Hai

  Buy-rated smartphone supply-chain name

  Strengths

  Listed by Goldman Sachs as a Buy and also appears in related Conviction List recommendations, potentially benefiting from smartphone supply-chain demand and product upgrades.

  Weaknesses

  Industry-wide shipments are still declining year over year, and end-demand is affected by memory costs and seasonality.

  Comparison

  Belongs to the same supply-chain-related recommended group as AAC, Lingyi, Largan, SZS, Fositek, and TSMC.

  Risks

  Smartphone demand below expectations, rising component costs, and changes in customer new product timing.

• AAC

  Buy-rated acoustics and smartphone component supply-chain name

  Strengths

  Goldman Sachs assigns a Buy rating and a HK$39.60 target price, making it one of the recommended supply-chain names.

  Weaknesses

  Affected by the overall smartphone shipment cycle and fluctuations in customer orders.

  Comparison

  Along with optical-related supply-chain names such as Largan, it benefits from the specification upgrade theme.

  Risks

  Shipment declines, weaker-than-expected specification upgrades, and price competition.

• Largan

  Buy-rated smartphone optics supply-chain name

  Strengths

  Higher penetration of high-megapixel cameras and ongoing camera specification upgrades may benefit the optics supply chain.

  Weaknesses

  The average number of cameras has fallen from its peak, which may weaken growth in terms of unit count.

  Comparison

  Compared with handset shipments, Largan is more leveraged to upgrades in high-end camera specifications.

  Risks

  Insufficient demand for high-end phones, slower camera specification upgrades, and customer concentration risk.

• TSMC

  Buy-rated semiconductor supply-chain name

  Strengths

  Goldman Sachs lists it as a Buy, and the report mentions chip upgrade trends such as the Kirin 9030 Pro in new Huawei models, reflecting high-end smartphone demand for advanced chips.

  Weaknesses

  The report does not directly provide TSMC’s specific order or revenue sensitivity within the China smartphone supply chain.

  Comparison

  Compared with the optics and assembly chains, TSMC has more upstream semiconductor manufacturing exposure.

  Risks

  Smartphone demand downturn, geopolitics and export restrictions, and changes in customer product cycles.

• China smartphone market

  Core research subject

  Strengths

  5G penetration is as high as 93%, and new products continue to focus on upgrades in foldables, AI, and imaging features.

  Weaknesses

  March shipments declined 6% YoY, 1Q26 declined 12% YoY, and 2Q26 is still expected to decline 6% YoY.

  Comparison

  Recovered 24% MoM after the Lunar New Year, but still has not turned positive on a YoY basis.

  Risks

  Rising memory costs, weak seasonal demand, and a year-over-year decline in new model launches.

Key data

• March China smartphone shipments20m units; -6% YoY; +24% MoMRecovered sequentially after the Lunar New Year, but remained negative year over year.
• 1Q26 China smartphone shipments-12% YoYStill in year-over-year decline at the quarterly level.
• Goldman Sachs 2Q26 forecast for China smartphone shipments-6% YoYAffected by seasonality and rising memory costs suppressing end-demand.
• March China 5G smartphone shipments20m units; +23% MoM; +1% YoYMIIT data, with 5G penetration at 93%.
• Number of new China 5G models in March13 models; -61% YoYA clear weakening versus 15 models in February 2026 and 67% YoY growth.
• Number of new China smartphone models in March15 models; -69% YoYCompared with 18 models in February 2026, the previous 64% YoY growth turned into a clear decline.
• Year-to-date 2026 sample models122 models; 353 camerasCovers brands including Honor, Xiaomi, OPPO, Vivo, and Transsion.
• Average number of cameras per model2.9 in 2026 YTDBelow 3.1 in 2025, 3.3 in 2024, and the 2022 peak of 3.8.
• 20MPx+ camera penetration62% in 2026 YTD; 57% in 2025The share of high-megapixel cameras continues to rise.
• Share of 2MPx/5MPx/8MPx cameras26% in 2026 YTDBelow 31% in 2025 and 36% in 2024.
• OPPO year-to-date 2026 camera sample45 models; 134 cameras; 27% at 2MPx/5MPx/8MPxOPPO averaged about 3.0 cameras per model.
• Honor year-to-date 2026 camera sample14 models; 40 camerasAveraging about 2.9 cameras per model.

Impact & implications

The implication for the industry is that end-demand for smartphones remains under pressure, making it difficult for shipments to turn positive quickly on a year-over-year basis in the near term, especially as rising memory costs may squeeze both OEMs and consumers. However, product upgrades have not stopped: migration toward 20MPx+ cameras, foldable form factors, AI assistants, and flagship imaging features remain key areas of brand differentiation. For the supply chain, shipment pressure and specification upgrades coexist, and structurally benefiting names may outperform companies that simply track the overall volume cycle.

Risks

• Rising memory costs continue to pressure end-demand and OEM profit margins.
• Seasonal demand in 2Q26 may be weaker than Goldman Sachs expects, leading to a wider YoY shipment decline.
• The sharp YoY drop in new model launches may reflect brand launch timing issues or insufficient demand confidence.
• The decline in the average number of cameras may offset some of the supply-chain upside from specification upgrades.
• If demand for high-end phones, foldables, and flagship imaging devices falls short of expectations, the benefit to related component supply chains may be lower than expected.
• The report includes multiple regional and regulatory disclosures, and investors should make judgments based on company-specific disclosures and their own risk tolerance.

What to watch

• Whether China smartphone shipments in 2Q26 decline 6% YoY as Goldman Sachs expects.
• The impact of changes in memory costs on handset pricing, demand, and supply-chain margins.
• Whether 5G smartphone penetration continues to rise from already high levels or enters a plateau.
• The new model launch cadence of brands such as Honor, Xiaomi, OPPO, Vivo, and Transsion.
• Whether 20MPx+ camera penetration can continue to rise, and whether the share of low-megapixel cameras continues to fall.
• Market feedback for high-end and foldable models such as Huawei Pura X Max and Oppo Find X9 Ultra.
• Changes in orders, gross margins, and valuations for Goldman Sachs’ recommended supply-chain names.