TrendForce: Smartphone shipments in the second quarter will decrease by 16.5% year-on-year

TrendForce predicts that the total number of mobile phone production in the second quarter will decrease by 16.5% year-on-year, setting a new record for the largest annual decline in a single quarter. The full-year shipment volume is expected to reach 1.243 billion units, a year-on-year decrease of 11.3%.

TrendForce said that as the pandemic spreads around the world, the smartphone market is facing the largest decline in recent years. In the first quarter, shipments fell 10% year-on-year to about 280 million units due to delayed resumption of work, labor shortages, and material shortages that led to low utilization rates. Although the supply chain and factory resumption of work have improved since the second quarter, the global economy has taken a sharp turn for the worse, impacting smartphone demand. The total production is expected to decline by 16.5% year-on-year to 287 million units.

Map from Taiwan Economic Daily

Murata said in mid-March that most customer orders were unchanged and plans for the year to the end were unchanged, but the company changed its tune on April 30. Murata now expects demand to fall 10% in the current fiscal year.

IDC warned that the epidemic initially only affected the supply side in China, but by the end of the first quarter it had evolved into a global economic crisis that hit demand.

TrendForce analysis shows that the leading manufacturer Samsung produced 65.3 million mobile phones in the first quarter, a year-on-year decrease of about 10%. The decline continued in the second quarter, with a quarter-on-quarter decrease of 10% to 58.3 million units. The second largest manufacturer Huawei produced 46 million units in the first quarter, which was in line with expectations. If the Chinese market stabilizes, the second quarter is expected to increase slightly to 48 million units. Apple's production in the first quarter decreased by 8.7% year-on-year to 37.9 million units. With the help of iPhone SE, the second quarter is expected to be similar to the first quarter.

Canalys analysts pointed out that almost no smartphone manufacturers can withstand the current impact. Samsung was in a favorable position in February because its manufacturing business was concentrated in South Korea and Vietnam. However, as the epidemic spread globally, this advantage quickly disappeared.

According to the Canalys report, the epidemic has also had a huge impact on smartphone sales channels. In regions such as Europe where strict quarantine measures are implemented, omnichannel retailers are trying their best to transfer offline inventory to online channels, but at a huge cost. These retailers are not yet ready for a full shift to online in terms of warehousing, transportation, and delivery capabilities. This also affects their demand for purchasing from suppliers and distributors. Canalys analysts expect that in these regions, e-commerce channels will have a clear advantage in the coming weeks.