Demand over-boosted? Xiaomi and OPPO stockpiled Japanese components

In the month since the United States tightened export controls on Huawei, Japanese parts manufacturers have received a new wave of orders from competitors such as Xiaomi, OPPO and vivo. The Nikkei pointed out that Chinese mobile phone manufacturers are worried that Washington will expand the ban to companies other than Huawei, which has led to a surge in demand.

A representative of JDI said bluntly, "The influx of orders has exceeded the capacity of the factory."

Market research firm IDC predicts that due to the COVID-19 pandemic and other reasons, global smartphone shipments will decline for the fourth consecutive year by 2020, decreasing by 10% to 1.2 billion units. Among them, Huawei's smartphone production this year is expected to reach about 190 million units, a 20% decrease from 2019. In addition, the company has limited inventory of mobile phone parts, so some analysts believe that Huawei's mobile phone production will further reduce from the first quarter of 2021.

However, some mobile phone manufacturers still plan to increase production to share Huawei's market share.

The report pointed out that Apple recently told suppliers that it plans to produce 220 million iPhones this year, 10% higher than previously estimated. In addition, several suppliers revealed that Xiaomi and OPPO hope to actually increase production to 200 million mobile phones in 2021, an increase of more than half from 2020.

A representative of a major Japanese parts manufacturer noted that "orders hit a record high at the end of September. Some manufacturers even plan to double their production plans for next year."

TDK expects purchases from other customers to exceed Huawei's orders, and one executive called the influx of orders "somewhat excessive."

Meanwhile, Renesas has been asked by a Chinese customer to have non-U.S. engineers redesign specific products at factories outside the U.S. PCB design software supplier Zuken also said companies in China and elsewhere have shown increased interest in finding alternatives to U.S.-made tools.

In addition, some manufacturers are seeking to continue cooperation with Huawei. Sumitomo Electric has begun using Japanese equipment to replace some American equipment to produce base station test components for Huawei.

But it is still important to note that some suppliers warned that this was a special "one-off demand boost" and the impact of the Huawei ban has not yet fully emerged.