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                                  Demand for TWS earbuds set to surge

                                  2020-February-5       Source: Chinadaily.com.cn

                                  Earphones used to be hung on walls or placed at the corners of counters at Huaqiang North Electronics Street in Shenzhen, Guangdong province, but now the new true wireless stereo earbuds are occupying the center stage.

                                  AI wireless hearables could become integral to intelligent IoT interaction

                                  Earphones used to be hung on walls or placed at the corners of counters at Huaqiang North Electronics Street in Shenzhen, Guangdong province, but now the new true wireless stereo earbuds are occupying the center stage.

                                  The shift signals a global bonanza hidden in the small-sized gadget.

                                  TWS earphones, containing two separate sets and a charging box, free users completely from the annoyance of cables and have recently stirred up a frenzy in Huaqiang North's electronics malls.

                                  Some vendors believe the TWS earphone boom can be compared with that of Mp3 players.

                                  No matter what a vendor is selling-mobile phones, computers, power packs or cables-almost all of their counters feature TWS earbuds. Some stores focus on product variety, while some just deal in even one category-products similar to Apple's Airpods.

                                  Apple rolled out its wireless headphone AirPods in 2016, followed by other mobile phone manufacturers such as Samsung, Huawei and Xiaomi.

                                  Research firm Strategy Analytics said Apple dominated the market segment with 60 million units in 2019. Priced $159 each at least, they could translate into about $9 billion revenue.

                                  Products of lesser-known brands, like i100 and F88, are available in various guises and feature diverse functions, such as LED display or the ability to take photos.

                                  In Longsheng Accessories Professional Market, one of the largest cell phone accessories markets in Huaqiang North, a seller surnamed Li said her shop now sells about 100,000 units of TWS earphones monthly and more than half of the shop's products are sold to overseas clients, especially from the United States and Southeast Asia, through both online and offline conduits.

                                  But the sales were only about 20,000 units per month in 2017 when she first jumped into the fray. Before that, her shop only sold mobile phone chargers.

                                  "One of our manufacturers spotted the opportunity in 2017 and suggested we pay attention to this direction. After market research, we decided to make an attempt," she recalled.

                                  In the second half of 2018, more and more vendors swarmed into the market with hundreds, even thousands of kinds of TWS earbuds, and their prices ranged from several dozen to more than 1,000 yuan ($143), she said.

                                  Li's store has only two types of patented TWS earphones with self-established brands selling for 299 yuan and 399 yuan. She estimated the market still has huge space to grow and is determined to keep investing to develop new types of products this year.

                                  She is confident that her store's sales of TWS earbuds can grow by 30 to 50 percent annually in the next two years.

                                  Meanwhile, traditional electronics component providers in Shenzhen are receiving rising orders related to TWS earbuds and are adjusting strategies accordingly.

                                  Goodix Technology Co, a provider of in-display fingerprint sensors, in December launched a series of in-ear detection and touch control devices, which have already been adopted in Oppo's latest TWS earphones.

                                  In May, the company also unveiled a new high-performance Bluetooth system chip that can be implemented in a wide range of mobile devices, wearables and the internet of things products.

                                  EVE Energy, a leading lithium primary battery producer in China, has become a battery provider for Samsung's TWS product, according to a report of Hua Chuang Securities.

                                  It also says the company's production capacity was 3 million to 4 million units of TWS batteries monthly last year and far from meeting the demand. It envisages EVE's shipment could achieve 50 to 100 million units in 2020.

                                  Both companies' shares rocketed in 2019 and the first month of 2020 saw them reach record highs.

                                  In addition, the TWS earphone index surged more than 200 percent in 2019 and the total value of the 17 companies involved exceeded 760 billion yuan by the middle of December, according to China's news outlet Cailian Press, citing data from Wind.

                                  As for the future, Counterpoint Research estimates the compound annual growth rate of TWS hearables would reach 80 percent from 2019 to 2022, while annual shipments are expected to reach 120 million units globally in 2019.

                                  Geographically, the US accounted for about one-third of the global market and China expanded by 44 percent in the third quarter of 2019.

                                  TWS hearables appeal to consumers because of the elimination of inconvenient wires and their advanced features such as active noise cancellation, but industry players and insiders are counting on the gadget to play a much more significant role rather than being just a tool for making calls and listening to music.

                                  Like smart speakers, the device could become integral to intelligent IoT interaction with items like smart speakers, as many mobile phone providers have enabled their TWS earphones with intelligent AI assistants.

                                  Wang Youfei, intelligent terminals manager of Shenzhen-based Chinese smartphone brand Vivo, said the company's TWS headset can wake up AI assistant Jovi directly by voice demand, support express payment, read out WeChat content and translate real time.

                                  He believes the device is the new entry for interconnection between users and terminals in the era of AI and 5G.

                                  Liz Lee, senior analyst at Counterpoint Research, agreed TWS earphones will evolve into smarter devices by replacing and enhancing some functions of current smartphones.

                                  Moreover, she said the new portal also bodes well for other tech bellwethers, such as Amazon, Microsoft and Google, to promote AI voice assistants. For instance, Airpods Pro comes with Siri and Amazon Echo Buds with Alexa.

                                  She sees this as being in line with global tech companies' future product strategies, which aim to focus on voice communication and create high-added value.

                                  Consumers queue up at an Apple store in Shanghai on Oct 30, when the company's wireless earbuds AirPods Pro was first put on shelves in China. WANG GANG/FOR CHINA DAILY

                                  Editor: Monica Liu

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