The smartphone industry falls under the oligopoly market structure. An oligopolistic market structure is a type of market form where a market or industry is dominated by a small group of large sellers. When a market is shared between a few firms, it is said to be highly concentrated.

 

Thus, although the smartphone industry has a ton of different smartphone brands, there only a few big players. In the smartphone industry the 5 major players are Samsung Electronics, Apple Inc, Huawei Technologies Co. Ltd, Xiaomi Corporation and Vivo Communication Technology Co. Ltd. 

2. Characteristics of smartphone industry

The characteristics of an oligopolistic market is an industry dominated by a small number of large companies, interdependence and has high barriers to entry. 

In the smartphone industry, there are ton of different brands in the market that have been introduced to consumers. However, since the market is dominated by established players such as Samsung Electronics, Apple Inc, Huawei Technologies Co. Ltd, Xiaomi Corporation and Vivo Communication Technology Co. Ltd, brands like Nokia, Sony, HTC, Motorola and Blackberry will be unfamiliar to consumers. Nowadays, most people can be seen using smartphone brands that belongs to the 5 established players in the smartphone market. Since the top 5 established brands has cornered more than half of the smartphone market, the rest of the market is left for the remaining hundreds of other brands to compete fiercely with each other. 

Support from key source 2: List of major players and market concentration of the smartphone industry.

The smartphone industry is interdependent on each other in their decision making. Thus, when a brand starts designing a new model of their products which immediately captures the attention of the consumers, this provokes the countermoves of the rival brands in the industry.

Thus, when any of the 5 major players in the smartphone industry launch new products, the whole industry is affected. This has resulted in every player in the market to be on alert.

 

Support from key source 2: Oppo Mobile Telecommunications Corp. Ltd launched their new sleek smartphone OPPO F19 in April 2021, their rivals, both Vivo Communication Technology Co. Ltd and Samsung Electronics then followed closely by launching the Vivo Y72 and Galaxy A22 5G respectively in July 2021.

Established smartphone brands maintain their position in the market through several barriers to entry. The most important barrier is brand loyalty. As the 5 major smartphone companies use different operating systems, which affects the phone's functionality, consumers are unlikely to purchase a different company's phones as it might be very troublesome to transfer their data and get used to the phone. Hence, smartphone companies like Apple or Samsung that have been well-established in Singapore for a long time will have a larger and more loyal customer base as compared to newer companies like Oppo or Oneplus. Thus, this makes it difficult for newer companies to enter an already saturated market, especially for smartphones.

Support from key source 2: Scope of the report, market is segmented by geography and operating system(iOS & Android).

3. Demand and/or supply determinants that are applicable to the smartphone industry

Expectation of buyers 

Phones will become more expensive in the future due to scarcity. As we have seen lately due to the pandemic, when there was a shortage of toilet paper and masks, both companies and individuals took advantage of this and sold these items at significantly higher prices than compared to usual prices. And seeing as smartphones are more of a necessity these days, buyers can expect smartphones to increase in price. 

Support from key source 3: Vendors of mobile phones shipped out 325.5 million units which is 6% lower compared to the third quarter of the last year of 348 million. Manufacturers of mobile phone components are also planning to raise the prices of these components.

Price of related goods 

Production of other electronics has been affected. As computers are an alternative to mobile phones, people might look to purchase them so applying the law of demand, there will be more demand for computers instead of phones as they will likely be cheaper. As a result, computer manufacturers may increase their production so as to meet the demand and make more profit.

Support from key source 3: The production of items including televisions, computers and cars had been hampered in the last year and is expected to continue to the next year.

Expectation of sellers

Phones are likely to rise in price due to the chip shortage, hence, applying the law of supply, phone manufacturers are likely to slow down or completely stop production of phones so they can hold onto more phones or components so they are able to sell them for a higher profit margin.

Support from key source 3: Apple and Samsung had warned of possible component shortage that could affect production and had stocked up chips but most of their products were still affected due to the chip shortage.

Number of sellers 

Phone shipments to Singapore have dropped. This will cause there to be lesser sellers in the market, which will decrease the number of phones for sale in Singapore. So according to the law of supply, the prices of phones in Singapore will likely increase.

Support from key source 3: According to the infographics, the net annual growth of all phone vendors in Singapore has dropped 6% compared to last year.

Factor/resource price 

Chips essential to smartphone production are increasing in price due to shortage. As the price of raw materials needed to produce phones increases, manufacturers will likely raise the price of phones as well so that they will continue to make a profit, or their production will be slowed which will also have a similar effect on the prices of phones. 

Support from key source 3: Due to different factors like increased demand for electronics and the Covid-19 pandemic causing factories to halt production, the global semiconductor shortage continues. A major chipmaker was also reportedly planning a price hike.

Due to the global economic slowdown, many jobs have been lost. This has resulted in the demand for mobile phones to decline as people are not willing to spend money. Mobile phone manufacturers sell mobile phones in line with this situation by setting them at a reasonable price so that people can afford them. Thus, the law of demand states that as the price decreases, the quantity demanded increases.
In response to changes in the global economy, people’s requirements for the performance and price of high-end mobile phones have gradually declined. Instead, they will buy other mid-range phones or tablets and computers with similar performance to high-end phones. The prices of mobile phones in the market will vary. According to the law of supply and demand, its price of mobile and cost will adjust according to the market mechanism.

Support from key source 4: Phone manufacturers have suffered declines in demand for higher-end phones that cost over $1,000 due to the global recession and are producing more lower-end phones.

Variable cost in manufacturing displays of different technology

 
The more advanced the technology used to manufacture mobile panels, the higher the production costs will be. Manufacturing mobile panels with a more advanced technology results in an increase of production costs. The types of different panel made from different technology makes a difference between manufacturing high-end mobile phones and middle-ranged mobile phones. When higher quality panels are manufactured, manufacturers are willing to sell their phones at a higher price. Hence as the price increases, the quantity demanded decreases.

Support from key source 4: The display is one of the most important components in a phone and determines whether a phone succeeds or not. The flexible OLED displays give manufacturers more space to work with so it can be used for other parts, which will cause the price to increase.

Supply price of mobile processor and chips

The more advanced the mobile processors and chips are, the more efficient the mobile phones are. Due to the effectiveness of the processor and chips, faster processing speeds are possible, however, this will result in mobile manufacturers increasing the price of mobile phones as they now cost more to produce and more opportunity costs are incurred from not using their money for other beneficial purposes. Hence as the price increases, the quantity demanded decreases.

Support from key source 4: Data processors are the most important component that determines the processing speed of the phone, so the processing capabilities of the chip determine its price.

High demand for larger multi-lens camera module

The most important factor that affects the price of phones is called modular programming. The more accurately the module is programmed, the better the pictures taken will be, which will also help compatibility. With the high demand for better quality cameras in phones, manufacturers are able to sell mobile phones with better cameras at higher prices.

Support from key source 4: The camera has become the most important aspects when choosing a smartphone for many. So, the better the camera module gets, the more expensive the phone becomes.

Market conditions

In response to changes in the global pandemic, many office workers or students stay at home for work and home-based learning, this results in the demand for tablets and computers to gradually increase.
Demand for mobile phone gradually declined. When the demand of tablets and computers is more than mobile phones, the price of mobile phones in the market will decline. According to the principle of supply, when the supply of goods exceeds demand, the prices of phones will be lowered according to the market mechanism.

One area our team could improve on in time management. Our group started a bit late, thus there was a bit of rushing in finishing the work. Thus, I learn not to do project last min so that we will have more time in completing the work and not rush through it.  

One interesting fact I have learnt is that despite Samsung and Apple being rivals, Samsung still provided Apple with DRAM memory chips for its smartphone and tablets. Thus, Apple, as a result accounted for 9% of Samsung’s revenue.

By contrast, price declines in the following CPI categories contributed negatively to CPI-All Items inflation in the third quarter. Clothing & footwear prices fell by 5.6 per cent due to cheaper ready-made garments and footwear. Communication costs dropped by 2.0 per cent on the back of lower telecommunication services and equipment costs. Prices of miscellaneous goods & services edged down by 0.4 per cent on account of a fall in the cost of personal care items.

Support from key source 3: Table on page 9, "Exhibit 1.14: Percentage Changes in CPI over Corresponding Quarter of Previous Year"

Conclusion

Although the country's overall economy is affected by inflation, the GDP has risen slightly and it is a good sign as this indicates economic growth. With the country's domestic economy gradually beginning to recover, people's living standards have also improved. However, with the rise in prices, people's consumption patterns are gradually changing, some people may become more conservative with their spending, while some people may choose to maintain an open and optimistic attitude with their spending. 

3. Labour market situation in Singapore as a whole (Unemployment)

Overview

Singapore’s total employment rate has declined lesser in the third quarter of 2021, causing Singapore’s labour market to perform better in Q3 2021 compared to Q1 and Q2. This is due to the resident employment rate growing at a faster pace, although there is a slight decline in the total employment rate due to the continued fall in the non-resident employment. Due to an easing in unemployment and retrenchment rate and the improving re-entry rate among retrenched residents, job vacancies have rose. 

Main finding

The total employment rate declined slightly in 3Q 2021 (-2,400 excluding Migrant Domestic Workers than the previous quarter (-16,300). The resident employment went up by 19,100 while the non-resident employment fell by 21,500. 

The resident employment grew by 19,100, thus, leading to a significantly smaller decline in the total employment compared to 2Q 2021. This is due to the increases of resident employment that were led by the outwards-oriented sectors such as Information & Communications, Professional Services and Financial Services, as well as domestically oriented sectors of Administrative & Support Services and Health & Social Services. While the resident employment growth in the Food & Beverage Services, Arts, Entertainment & Recreation, Accommodation, and Retail Trade continued to trail behind the other sectors.

Unemployment rates have improved but remain above the pre-covid levels

The seasonally adjusted unemployment rate has declined from August to September by 0.1% to 2.6%. The resident unemployment rate now stands at 3.5% while the citizen unemployment rate stands at 3.7%. However, the resident long-term unemployment rate has increased to 1.2% in September 2021 from 0.9% in June 2021. 

Retrenchments declined

There was a decline in the retrenchments rate in 3Q 2021 from 2,340 or 1.3 retrenched per 1,000 employees to 1,900 or 1.1. Similarly, the six-month re-entry rate among the retrenched residents improved in the 3Q 2021 from 64% to 66%. There were also fewer employees placed on short work-week or temporary layoff in the 3Q 2021. In 2Q there were 5,580 employees placed on short work week or temporary layoff. However, in 3Q, employees who were placed on short work week or temporary layoff decreased from 5,580 to 4,060.

Rise in job vacancies

There was an increase in the seasonally adjusted job vacancies from 92,100 in June 2021 to 98,700 in September 2021. Together with the decline in the unemployed persons, the ratio of job vacancies to unemployed persons has increased. For every 100 unemployed persons in September 2021 there were 209 job vacancies, an increase of 46 from June 2021.

Conclusion

The Singapore labour market is expected to recover into 2022, but unevenly across the different sectors and industries. However, the Singapore labour market will only become tighter if the border restrictions continues to prevent foreign labour from entering Singapore.

4. Government measures

The government is making use of smartphones to trace people that recently came into contact with Covid-19 positive cases

Government initiatives like the "Senior Go Digital Initiative" to ensure that seniors, who are most at risk of being left behind, are taught how to make use of smartphones

Support from key source 5: "The IMDA launched the Senior Go Digital initiative in May 2020 to ensure that older adults are not excluded even as the rest of the country progress towards becoming a smart nation."

Government schemes like the "Mobile Access for Seniors scheme" ensure that seniors who are not able to afford smartphones are able to afford them

Support from key source 5: "...to ensure that telco mobile plans and smart phones remain affordable to senior citizens facing financial difficulties, there is the Mobile Access for Seniors scheme."

Moving towards an increasingly digitalized world means that everyone will need a smartphone, resulting in higher domestic demand/consumption for smartphones