China’s consumer electronics industry is experiencing a noticeable split. Companies involved in the integrated circuit sector, such as those developing computing power and memory chips, are reporting significant profits. In contrast, manufacturers of smartphones, cameras, and other electronic devices are under considerable pressure due to rising chip costs.
Data from the National Bureau of Statistics shows that the profits within the Chinese electronics sector increased by 110 percent from January to July compared to the previous year. This growth contributed approximately 9.3 percentage points to the overall profit increase of large-scale industrial enterprises. The integrated circuit segment saw an extraordinary profit increase of 1,850 percent, making up over 80 percent of the industry’s total profit gains.
A provider of artificial intelligence services catering to numerous consumer electronics companies experienced a remarkable profit increase of 466 percent to CNY 200 million (about USD 29.8 million) in the first half of this year, compared to the same period last year. Its revenue more than doubled to nearly CNY 2 billion (approximately USD 297.6 million), according to its financial disclosures.
Meanwhile, many device manufacturers are seeing shrinking profits due to the rising costs of upstream components. Globally, smartphone shipments declined by 6.7 percent in the quarter ending June 30 from the previous year, marking a second consecutive quarter of decline, as detailed in the latest Industry Development Report for 5G and 6G. Chinese smartphone manufacturers have reported sharp decreases in performance.
Insta360, a company specializing in camera and imaging technology, revealed that its net profit for the first half of the year dropped 94 percent to CNY 30.4 million (around USD 4.5 million), despite revenue increasing by 50 percent to CNY 5.5 billion. The persistent rise in dual data rate and other memory chip prices has created substantial cost challenges and negatively impacted short-term profitability.
To address these challenges—such as squeezed margins upstream and weakening demand in certain segments—many companies in the consumer electronics supply chain are focusing on expanding exports to international markets.
One company has established subsidiaries in Hong Kong, the United States, Singapore, and Japan. Its senior vice president stated that the firm aims to further grow its presence in Southeast Asia, the Middle East, Europe, South America, and beyond. The company plans to develop local partnerships and develop overseas markets as a new growth engine.
Export data indicates that China’s household appliance shipments increased by 5.9 percent in volume and 6.2 percent in value during the first seven months of the year compared to the previous year. Phone exports experienced a 6.6 percent decrease in volume but a 12 percent rise in value due to higher prices. Additionally, exports of audio and video equipment, along with related components, grew by 13 percent in value.