During the 2020 Chinese New Year, mobile phone shipments in the Chinese market declined by about 50-60% year on year, resulting in an high inventory of about 50-60 million in the current channels, Tianfeng International analyst Ming-Chi Kuo said in a recent report.
Kuo takes a conservative look at the mobile phone industry for the first half of 2020 and believes that mobile phone brands and the industry chain are facing 3 potential risks:
- China's mobile phone shipments will be lower than market expectations.
- The contribution of 5G mobile phones to the Android brand replacement demand is less than expected.
- The iPhone supply was affected by the pneumonia outbreak in 1Q20 and shipments were lower than expected.
He said that mobile phone shipments in the Chinese market in 2019 were about 360-380 million units, which was affected by lower than expected 5G replacement demand and the negative impact of pneumonia on consumer confidence.
He estimated that China's mobile phone shipments in 2020 will decline by 15% year-on-year to 3.1-3.3 100 million units, lower than the market consensus of 330-350 million units.
Desalting inventory is a top priority for the current Chinese Android brand, he said, adding that Chinese brands will actively promote it.
If all goes well, the inventory level may fall to the normal level by the end of 2Q20 or 3Q20. However, the process of destocking will not be conducive to new opportunities for Chinese brands and related industry chains, he said.
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