Global Shipment Surge... Smartphone 'V'-Shaped Rebound Expected

Positive Performance Outlook for the Second Half of the Year

Apple's iPhone 12 mockup (Photo by Asia Economy DB)

[Asia Economy Reporter Kum Boryeong] Last month, smartphone shipments rose by more than 20% compared to April, leading smartphone stocks to aim for a performance rebound.

According to market research firm Strategy Analytics (SA) on the 24th, global smartphone shipments last month totaled 81.6 million units. This represents a 27% decrease compared to the previous year but an 18% increase compared to the previous month.

The strong promotions conducted by the government and manufacturers to stimulate smartphone demand in the Chinese domestic market had a significant impact. The reopening of major sales channels as economic activities resumed in several countries also contributed.

In Samsung Electronics' case, smartphone shipments last month surged by 47% from the previous month to 16.9 million units. This was due to the restart of suspended factories in India and Vietnam, and the expansion of shipments of mid-to-low-end smartphones such as the Galaxy A series in the second quarter.

Samsung Electronics is expected to benefit in the smartphone sector due to trade conflicts between the US and China, as well as border clashes between China and India. Researcher Noh Kyung-tak of Eugene Investment & Securities analyzed, "The continued US sanctions against Huawei and the boycott of Chinese products in India will have a positive impact on Samsung Electronics." Last month, Huawei's smartphone shipments were 17.5 million units, which actually decreased by 8% compared to the previous month.

Smartphone shipments are expected to increase significantly between this month and next month. Researcher Kim Young-woo of SK Securities said, "Since last month, the inventory level of smartphones has become much healthier by focusing on inventory reduction through aggressive promotion policies," adding, "The turning point is expected to be this month rather than the third quarter." He further stated, "Global smartphone shipments between this month and next month are estimated to be between 90 million and 100 million units."

Component suppliers are also expecting a strong rebound. Thanks to the aggressive shipment strategies of smartphone manufacturers, short-term investment sentiment for component suppliers is expected to improve sufficiently. Moreover, with Apple planning to release the iPhone 12 in the second half of the year, orders for some components such as cameras and substrates have already started this month. Apple orders for component suppliers are understood to have increased by about 15% compared to previous new product launch orders.

The securities industry views the second half performance of smartphone stocks positively. Regarding LG Innotek, which supplies smartphone camera modules and other components, Daishin Securities estimated operating profit for the second half to increase by 6.8% year-on-year to 422.6 billion KRW. Additionally, IBK Investment & Securities expects KH Vatec's sales to increase in the second half due to the launch of foldable phones.