The global smartphone production in the first quarter is expected to drop 12% year on year to 275 million units, which is a five-year low, as the Coronavirus outbreak impacts the smartphone supply chain, market research firm TrendForce said in a report on Monday.
Delayed work resumption and uncertainties in employees’ returns will cause the monthly delivery of key components to be postponed, thus affecting the progress of smartphone production, the report said.
The outbreak is not expected to cause an immediate break in the supply chain, once work resumes at smartphone assembly vendors’ production bases on February 10, the report noted.
Samsung has suffered the least damage from the outbreak, but because it sources some of its components from China, Samsung’s 1Q20 production forecast has been reduced by 3% compared to our previous forecast, registering 71.5 million units, the report said.
Huawei, which ranks second in terms of quarterly production volume, was placed on the U.S. Entity List and subsequently prevented from installing GMS on their newer models, lowering their overseas sales.
Turning to a business model that heavily focuses on the Chinese market, Huawei sustained major losses under stagnant Chinese New Year sales numbers. Owing to losses in both domestic and overseas markets, Huawei is projected to produce 42.5 million units in 1Q20, a 15% decrease from our previous forecast, the report said.
Third-place Apple made arrangements for its employees to work from home in an effort to reduce risks of infection, but this has the side effect of slowing down the development of new iPhones in 2H20, with component certification coming to a near halt.
In the short term, Apple faces uncertainties in its labor force’s work resumption, and the supply of certain key components involved in the production of new iPhones cannot be properly delivered.
These setbacks will directly affect the upcoming release of iPhone SE2 (also known as iPhone 9) and lower our forecast of 1Q20 iPhone production by about 10%, from 45.5 million to 41 million units, according to the report.
Fourth-ranked Xiaomi primarily relies on online sales, with a relatively low market share in China at about 9%. Compared to OPPO and Vivo, which have a domestically focused sales model, Xiaomi is not as affected by the outbreak; thus, TrendForce is revising its 1Q20 production forecast to 10% lower than our previous projection, with 2.47 million units produced in the quarter, essentially unchanged from 1Q19.
Also, TrendForce is lowering Oppo and Vivo’s production forecasts by 14% and 15%, with 2.4 million and 1.7 million units produced, respectively. Oppo and Vivo rank fifth and sixth place globally in 1Q20.
