The mobile phone supply chain is collectively facing pressure from rising upstream component costs. An analysis of first-quarter financial reports from multiple handset industry players reveals that persistent increases in raw material and core chip prices are challenging corporate profitability. Handset manufacturers are also actively seeking new growth avenues. By 2026, as supply chain pressures intensify, a battle for new market opportunities is underway.
Companies heavily reliant on mobile phone operations are experiencing more significant losses. The degree of dependence on handset terminal business is directly impacting their current operational performance. Disclosed financial data shows a clear divergence among these firms.
Among ODM manufacturers, Huaqin Technology reported 2025 revenue of 171.42 billion yuan, representing 56.02% year-on-year growth, with net profit attributable to shareholders reaching 4.05 billion yuan, up 38.55%. The company attributed revenue growth to business expansion and substantial increases in product shipments, which also drove profit growth.
In contrast, fellow ODM manufacturer LONGCHEER Technology experienced different challenges. The company's 2025 revenue declined 9.18% to 42.13 billion yuan, while net profit rose 16.76% to 585 million yuan. Its smartphone business revenue fell 19.92% to 28.94 billion yuan, with phone shipments declining due to rising costs of components including memory chips.
This trend became more pronounced in the first quarter. LONGCHEER Technology's Q1 revenue decreased 19.35% to 7.56 billion yuan, with net profit plunging 90% to 15 million yuan. The company cited weak consumer electronics demand impacting revenue, increased investment in new businesses like AI PCs and automotive electronics raising costs, and unfavorable USD exchange rate fluctuations increasing financial expenses. Smartphone business revenue dropped 22.78% to 5.21 billion yuan.
Regarding revenue composition, Huaqin Technology derived 46.79% from mobile terminals and approximately 44% from computing and data business in 2025, making these its primary revenue sources. LONGCHEER Technology remained more dependent on smartphones, which contributed 68.29% of 2025 revenue, with AIoT accounting for 18.68%.
According to Counterpoint Research, substantial memory price increases in second-half 2025 created significant cost pressures for the global smartphone industry, particularly in the low-end segment where sub-$150 smartphone sales declined 11% year-on-year. Since mid-to-low-end OEM models heavily rely on ODM/IDH partners, smartphone shipments designed by ODM/IDH firms dropped 10% in second-half 2025, ending two consecutive years of growth.
Counterpoint senior analyst Lin Keyu noted that facing reduced orders and competitive pressures, ODM/IDH manufacturers have shifted from traditional procurement models of ordering components after securing orders to more cautious strategies based on inventory levels. To survive, many companies are diversifying revenue sources by expanding into areas like AI servers and robotics.
Evidently, against the backdrop of supply chain price increases, traditional mobile industry business is entering a "stock game" phase. The era of relying solely on handset shipment growth has passed. Companies seeking sustained growth must either upgrade technology to increase unit prices and market share in premium segments, or rapidly expand product lines to mitigate volatility from single markets.
Diversification efforts are accelerating across the industry, from complete products to supply chain components, toward more profitable AIoT markets. OPPO has internally launched a gimbal camera project, essentially handheld smart imaging devices, confirming in September 2025 its new form factor imaging product series is progressing as planned, with products expected to launch in Q4 this year with substantial resource allocation.
Vivo is also reportedly preparing handheld imaging products for launch this year, indicating handset manufacturers are leveraging their accumulated imaging capabilities to expand into growth markets. IDC statistics show global handheld smart camera shipments reached 16.65 million units in 2025, surging 83% year-on-year, with sales exceeding 46.1 billion yuan, up 86%. IDC projects the global handheld smart camera market could surpass 40 million units by 2030, with a five-year compound growth rate near 20%.
Unlike Huawei and Xiaomi's earlier multi-device category expansions, OPPO and vivo have been relatively cautious but are now accelerating. OPPO recently announced its tablet series sales grew 112% in 2025, with watch and earphone series both exceeding 50% growth.
This trend aligns with supply chain companies' exploration directions. Financial report analysis reveals AIoT categories generally demonstrate better profitability, making diversification crucial as global smartphone market growth has peaked and begun contracting. Huaqin Technology's financials show its innovation business (14.05%) and AIoT business (11.13%) achieved significantly higher gross margins than mobile terminals (9.24%).
The company explicitly mentioned robotics as a key second growth curve since 2025, leveraging consumer electronics experience to develop full-chain R&D capabilities from core components to complete systems. During earnings discussions, company secretary Li Yutao acknowledged gross margin improvement potential over 3-5 years through product mix optimization toward higher-margin categories like data centers and switches, alongside reducing expense ratios.
Huaqin has established full-stack product portfolios in data center business including AI servers, general servers, switches, and storage servers, while its AIoT line covers emerging smart hardware like smart home devices, XR, and gaming products. LONGCHEER Technology showed similar patterns, with AIoT achieving the highest 2025 gross margin at 12.01% (up 0.73 percentage points), compared to smartphone business at 7.91% (up 2.99 percentage points) and tablets at 7.28% (down 1.34 percentage points).
The 2025 mobile industry is undergoing transformation from "consumer electronics dependent" to "multi-scenario smart hardware enabler." Short-term, handset business remains the revenue foundation for most supply chain companies, but growth drivers have clearly diverged—technology leaders gain premium profits through high-endization while scale leaders mitigate cyclicality through horizontal expansion. Long-term, new sectors like AI servers, smart vehicles, and embodied intelligence are becoming new growth engines.
Huaqin Technology projects total revenue will exceed 300 billion yuan by 2028-2029, with phone-related business first breaking the 100-billion-yuan mark, while data center business is expected to cross the 100-billion threshold within 3-4 years. Li Yutao indicated the company's super-node products will enter mass production in second-half 2026, bringing significant revenue increments, with general servers also showing rapid growth.
Following the Beijing Humanoid Robot Half-Marathon, Lens Technology announced supplying 132 core metal structural components covering key movement units including head, arms, hips, and legs for the winning robot. These developments indicate the mobile industry's "second growth curve" is transitioning from concept to tangible performance increments. For these companies, phones are no longer the business center but merely important nodes on the "smart hardware platform," with new narratives unfolding amid computing power and new form factor terminal trends.
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