Smartphone Sales Down 12% in Q1, Lowest in 5 Years Expected
Apple and Huawei Hit Hard... Opportunity for Samsung in Market Share Competition
[Asia Economy Reporter Joselgina] Due to the impact of the novel coronavirus infection (COVID-19) that has alarmed the world, global smartphone sales in the first quarter are expected to hit the lowest level in five years. While companies like Apple and Huawei, which have large-scale production bases in China, are taking a direct hit, competitors such as Samsung Electronics may gain a secondary benefit in the market share battle.
According to market research firm TrendForce on the 19th, global smartphone shipments in the first quarter (January to March) are estimated to have decreased by 12% year-on-year to 275 million units. By company, Apple and Huawei shipments are expected to decline by 10% and 15% respectively, whereas Samsung Electronics, which has a large production base in Vietnam, is expected to see a relatively smaller decrease of 3%.
IT specialized media PhoneArena, citing the TrendForce report, stated, "For now, COVID-19 will harm all smartphone suppliers except Samsung Electronics," and evaluated that "Samsung does not need to worry for the time being." Rather, it explained that Samsung Electronics could seize the opportunity to take market share from competitors Apple and Huawei by leading with 5G flagship smartphones such as the Galaxy S20 series.
Other major foreign media also viewed that "Samsung Electronics can capture the iPhone sales demand that Apple will miss," and "the impact of COVID-19 on smartphone production in Vietnam is still limited." This indicates that Samsung Electronics' global smartphone sales volume is expected to remain relatively steady, the media added. 9to5Mac reported, "About half of Samsung Electronics' smartphones are produced in Vietnam," and "the sluggishness in the largest market, China, means Samsung will be less affected by demand decline than Apple."
The day before, Apple officially confirmed that due to COVID-19 causing disruptions in iPhone production and worsening demand within China, it has become difficult to achieve the initially forecasted first-quarter (second quarter in U.S. terms) revenue target. For Apple, sales of wearables such as AirPods and Apple Watch, which have emerged as new growth engines, are also expected to plummet. Huawei, which has been focusing on the Chinese domestic market after the U.S.-led trade war, is also taking a direct hit. Huawei's market share in China approaches 40%.
TrendForce reported, "Because the smartphone supply chain is labor-intensive, the impact of COVID-19 has been greater than in other IT sectors," and "shortages are also appearing in upstream components such as passive components and camera modules." Unless the situation calms down by the end of February, disruptions to global smartphone production in the second quarter are inevitable.
However, Samsung Electronics, which is expected to gain secondary benefits in the market share battle, will inevitably face negative effects on parts supply if the situation prolongs. According to TrendForce, global smartphone sales in 2020 are estimated to decrease by 1.3% year-on-year on an annual basis, remaining at the lowest level since 2016. Additionally, the laptop and LCD markets are also expected to record double-digit declines, and with most telecommunications bids in China postponed, negative impacts on 5G infrastructure construction are also anticipated.
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