Global Smartphone CIS Market to Fully Recover in 2024: Rise of Domestic Manufacturers and Accelerated High-End Replacement

Global Smartphone CIS Market to Fully Recover in 2024: Rise of Domestic Manufacturers and Accelerated High-End ReplacementThe global smartphone market is experiencing a strong recovery in 2024, driven by the end of the inventory destocking cycle and the surge in demand for technological upgrades fueled by innovations like generative AI. The deployment of generative AI on mobile devices, such as real-time voice translation, image enhancement, and personalized content generation, is pushing the transformation of smartphones into "AI terminals

Global Smartphone CIS Market to Fully Recover in 2024: Rise of Domestic Manufacturers and Accelerated High-End Replacement

The global smartphone market is experiencing a strong recovery in 2024, driven by the end of the inventory destocking cycle and the surge in demand for technological upgrades fueled by innovations like generative AI. The deployment of generative AI on mobile devices, such as real-time voice translation, image enhancement, and personalized content generation, is pushing the transformation of smartphones into "AI terminals." This trend significantly impacts the technological development of mobile phone cameras and presents new opportunities for CIS (CMOS Image Sensor) manufacturers.

I. Smartphone Market Recovery and CIS Inventory Rebound

According to the latest data from Counterpoint Research, a third-party market research firm, global smartphone sales are expected to increase by 4% year-on-year in 2024, ending two consecutive years of negative growth (global smartphone shipments decreased by 12% and 5% in 2022 and 2023, respectively). Data from CJJ Consulting indicates that by early 2024, CIS manufacturers' channel inventory levels had dropped to less than 5 weeks, below the industry's healthy level of 6-7 weeks. Simultaneously, the initiation of 5G replacement cycles in emerging markets such as Southeast Asia and Latin America further boosted CIS orders, resulting in a month-on-month increase of over 30%. The market recovery is clearly visible, creating favorable conditions for CIS manufacturers to restore their performance.

II. Significant Improvement in Profitability of Domestic CIS Manufacturers

Domestic CIS manufacturers are also emerging from the downturn in the consumer electronics cycle, with a significant recovery in profitability. Several manufacturers' annual performance forecasts show a positive growth trend:

• Will Semiconductor: As an industry leader, Will Semiconductor's 2024 revenue is projected to reach RMB 25.408-25.808 billion, representing a growth rate of 20.87%-22.78%. This growth is mainly attributed to the increased demand for high-end smartphone CIS (such as the OV50 series) and automotive CIS (such as the OX08B40). The OV50 series has been successfully adopted as the main camera in high-end models like the Xiaomi 14 series and iQOO 12 series, demonstrating its competitiveness in the high-end market. Will Semiconductor also launched its high-end OV50K at the end of 2023 and the OV50M40 in August 2024, with mass production expected by the end of the year. In 2025, the company will launch a series of high-end products with 200MP and 50MP, further consolidating its leading position in the high-end market. The company's Q1-Q3 2024 report shows a comprehensive gross profit margin of 29.61%, an 8.21 percentage point increase year-on-year, highlighting the significant improvement in gross profit margin driven by high-end CIS products.

• Galaxycore: Galaxycore achieved breakthroughs in the mid-to-low-end market, with projected 2024 revenue of RMB 6.389 billion, representing a growth rate of 36.02%. Its growth primarily relies on penetration in the mid-to-low-end smartphone CIS and security markets.

• SmartSens Technology: SmartSens Technology's revenue growth was even stronger, reaching RMB 5.969 billion, a year-on-year increase of 108%. In the smart security field, SmartSens Technology's CIS shipments ranked first globally, with a market share exceeding 45%. Notably, the revenue from its high-end 50-megapixel products in the smartphone business exceeded 50%, successfully creating a second growth curve. SmartSens previously focused on products with less than 16MP, but has recently actively launched high-end products such as SC520XS, SC550XS, SC580XS, and SC5000CS, covering almost all main camera, telephoto, wide-angle, and shooting needs for mid-to-high-end phones. These high-end products, such as the SC550 (potentially used in Huawei Mate60 and foldable phones), SC580 (potentially in Huawei P70 and Mate70), and SC520/5000 (potentially in flagship sub-cameras or mid-range main cameras), have gained traction. Newly released SC585XS and SC555XS achieve full domestic production, further enhancing competitiveness. SmartSens Technology's mid-year 2024 report shows that the smartphone business share of high-end 50MP products has exceeded 50%. The company is transitioning from a primarily smart security focus to a three-pillar business model of "smart security + smartphones + automotive electronics," with smartphones becoming a major growth driver.

III. Supply Chain Security: Accelerated Domestication

Regarding the supply chain, while the most advanced logic chip processes have advanced to 2nm, advanced CIS processes are primarily in the 40nm to 28/22nm range. Domestic manufacturing processes can fully meet current demands. SmartSens Technology shifted the large-scale outsourcing of security CIS from Samsung to CSMC in 2023, successfully improving product gross profit margins. CSMC is also increasing its production capacity to meet SmartSens Technology's growing needs. On February 24, 2025, SmartSens Technology and CSMC signed a long-term strategic cooperation agreement, further securing capacity supply. According to supply chain sources, the CIS production capacity utilization rates of SMIC, Hua Hong Semiconductor, and CSMC have all reached 100%, and domestication and high-end development are gradually being realized.

IV. Accelerated High-End Replacement: Domestic CIS Challenges International Giants

However, there's a significant mismatch between the market share of Chinese smartphone CIS and the shipment volume of Chinese phone brands. According to Omdia, the top ten global smartphone brands in 2024 include a combined market share of approximately 50% for Chinese brands (Huawei, Xiaomi, OPPO, vivo, Honor, Transsion, realme, Lenovo-Motorola), while the global market share of Chinese CIS is only 15%-20%. This is primarily because high-end Chinese smartphone models still largely rely on Sony and Samsung's large-sensor and high-pixel sensors. Domestic CIS still lags in terms of dynamic range and low-light performance.

However, high-end replacement is accelerating and is becoming a major catalyst for boosting the performance of CIS manufacturers. For example, Will Semiconductor and SmartSens Technology are actively launching high-end products, which have been successfully applied to numerous high-end smartphone models. 50MP has become a sweet spot for smartphone CIS, and domestic replacement of high-end CIS will be a significant industry trend for some time to come. Considering Sony and Samsung's market share in 2023 reached as high as 55% and 25% respectively, there is huge room for growth for domestic CIS manufacturers.

V. Expansion into Emerging Applications: Automotive Electronics and AIoT

Beyond the smartphone market, the demand for dynamic visual sensors in autonomous driving and AIoT devices is also driving CIS manufacturers to develop low-latency, high dynamic range (HDR > 140dB) products. The strategic value of CIS as a "visual perception gateway" is opening up new growth curves in automotive electronics and IoT fields. Traditional giants such as Sony and ams are constrained by their IDM model, with production capacity tilted towards consumer electronics, while Chinese manufacturers have found a breakthrough in the automotive sector through flexible outsourcing and rapid customization strategies. Will Semiconductor's automotive CIS chip shipments reached 103 million units in 2023, surpassing ams to become the world's largest. The accelerated introduction of its high-end products to automakers, the growth in the quantity and value of vehicle cameras in low-to-mid-range vehicles, and expansion in the machine vision field are expected to further open new growth spaces for CIS.

VI. Summary and Outlook

In summary, the accelerating intelligent wave, continuous technological iteration, penetration of multi-camera systems, and the intelligent automotive trend are driving demand for CIS. Emerging applications are further expanding market space. The dual catalytic effects of policy support and domestic replacement further enhance the overall development prospects of the CIS industry. Despite certain risks and challenges, such as technological iteration, demand fluctuations, and supply chain stability, companies with core technologies, capacity assurance, and customer stickiness have enormous investment potential. Domestic CIS manufacturers, leveraging their advantages in technological innovation, rapid response to market demands, and cost control, are expected to maintain strong growth momentum in the coming years and capture a larger share of the global CIS market. In the future, increasing the domestication rate of high-end CIS with 50MP and above pixels, and expanding into emerging fields such as automotive electronics and AIoT, will be important drivers of industry development.