Smartphone Market Expected to Continue Slowing Next Year Due to China's Downturn Impact

'MLCC No.1' Japanese Murata President Expresses Concerns in Interview

Norio Nakajima, President of Murata Manufacturing Co., Ltd. in Japan

[Asia Economy Reporter Jeong Hyunjin] Norio Nakajima, president of Japan's Murata Manufacturing, the world's No. 1 manufacturer of multilayer ceramic capacitors (MLCC) and a supplier of parts for Apple iPhones, forecasted that the smartphone market will continue to slow down next year as it did this year. The demand slowdown caused by the worsening Chinese economy shows no signs of being resolved next year.

In an interview with Bloomberg on the 20th, President Nakajima said, "At least in fiscal year 2022, momentum to reverse the market situation will not return, and the situation will not be positive even afterward." He pointed out that "consumer electronics demand is sharply declining, and the situation for Chinese manufacturers is not good," noting that the world's largest smartphone market, China, is freezing up.

He mentioned that major central banks in countries such as the U.S. are raising benchmark interest rates and said, "If the economy were a little better, consumers would have tried to buy new phones to upgrade even slightly." He added, "What worries me is that people are waiting longer to upgrade their phones."

Murata is a Japanese company whose main product is MLCC, a component that helps stabilize current flow in electronic circuits. Known as the "rice of the electronics industry," MLCCs are used in most electronic products such as mobile phones, PCs, and automobiles. Murata, which holds more than 30% market share in the MLCC market, supplies these components to the iPhone.

Murata estimated that the number of products sold in the global smartphone market in fiscal year 2021 was 1.36 billion units and forecasted that this scale would decrease to about 1.2 billion units in fiscal year 2022. President Nakajima explained, "Chinese smartphone manufacturers tried hard to sell products outside their home country, but consumers in countries like India have started to avoid Chinese smartphones for various reasons, including intellectual property infringement."

However, President Nakajima expressed relief that the weak yen phenomenon in Japan would have a positive effect on Murata. Since Murata produces 65% of its products in Japan and sells more than 90% overseas, the depreciation of the yen can increase price competitiveness abroad and boost sales. President Nakajima said, "The weak yen makes our performance look better and allows us to breathe," adding, "However, the impact of exchange rates can weaken demand and lower factory operating rates, which is risky."