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16 March 2020

Q1/2020 smartphone production forecast cut again, from 12% down to 13.3% down year-on-year

Due to hindrances such as uneven factory work resumption statuses, a generally low rate of returning labor, and breaks in logistics and transportation, the smartphone supply chain is continuing to feel the effects of the COVID-19 outbreak and has not been recovering as previously expected, notes market analyst firm TrendForce.

The outbreak’s impact is projected to last 1-3 months, and the supply chain will not recover to normal levels until the second half of March at the earliest. So, TrendForce is further reducing its projection of first-quarter 2020 smartphone production from the pre-outbreak forecast of 307 million units and its post-outbreak forecast (of 10 February) of 275 million units (down 12% year-on-year) to 270 million units (down 13.3% year-on-year).

In terms of Q1/2020 demand, sluggish Lunar New Year sell-through in the Chinese smartphone market led to excessively high stocks in the sales channels. On the other hand, the outbreak has spread to more than 70 countries since the second half of February, in turn affecting the global economy and, by extension, smartphone sales in the overseas markets. TrendForce holds a relatively conservative outlook towards the Q2/2020 global smartphone market, with about 318 million units produced, an increase quarter-on-quarter but a 7.4% decrease year-on-year.

TrendForce anticipates that, assuming the outbreak can be contained by the end of Q2/2020, smartphone demand will go into a noticeable upswing in second-half 2020. Furthermore, with the release of 5G and multi-camera phones, 2020 global smartphone production is expected to reach 1.35 billion units, below the pre-outbreak forecast of 1.41 billion but down only 3.5% year-on-year.

Slowdown of 5G subsidies in China may defer demand for 5G handsets

Notably, the government of China (the leading market in terms of 5G development) is allocating most of its current budget to disease prevention and stabilization, potentially reducing 5G telecom funding. Also, since 5G infrastructure is not yet widespread, and new applications of the technology yet remain in their infancy, consumers have taken a wait-and-see approach regarding 5G smartphones, notes TrendForce. On the other hand, as the outbreak considerably affected the global economy, the general public has conserved its disposable income, deferring demand for 5G. TrendForce is thus reducing its 2020 5G smartphone production forecast from 250 million units to 200 million units, with a 15% penetration rate in the overall smartphone market.

Should the outbreak intensify, market demand will become the most important consideration in the long-term analysis of the smartphone industry, says TrendForce. Because of the interconnectedness of the global economy, the progression of the outbreak is damaging not only China’s GDP but also the overall global economy, leading to a cutback in consumer purchasing power and shrinking the overall smartphone industry ā€“ including 5Gā€“ even further, the firm adds.

See related items:

Q1 smartphone production forecast revised to 12% drop year-on-year due to coronavirus outbreak’s impact on supply chain

Tags: Smartphone shipments

Visit: www.trendforce.com

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