Coronavirus outbreak will hurt all major smartphone vendors except Samsung… for now
If you thought the cancellation of this year’s Mobile World Congress in Barcelona was bad for the industry, wait until you hear (more) about the expected impact of the ongoing coronavirus outbreak on global smartphone production and worldwide sales.
Obviously, China’s local smartphone market will suffer the largest decline as a result of many factories having to suspend all operations recently, but as confirmed by Apple, iPhone demand and assembly have also taken a big enough hit to lead to lower-than-expected overall revenues during the first three months of 2020.
That’s because the Cupertino-based tech giant relies hugely on China-located facilities and partners for iPhone production, and naturally, the same goes for everyone from Huawei to Xiaomi, Oppo, and Vivo. That basically only leaves one major smartphone vendor largely unaffected by the coronavirus epidemic. We’re talking about the biggest handset manufacturer of them all, which is neither headquartered in China, nor extremely popular around those parts.
Samsung has nothing to worry about… for the time being
China is not just the world’s most populous country, but also easily the largest smartphone market, with 85 million units shipped regionally in Q4 2019 alone and a grand total of 369 million units last year, compared to “only” 148 million in India. Obviously, everyone wants a piece of that huge, juicy pie for themselves, and while Samsung hasn’t thrown in the towel altogether, its production operations in the region were halted a few months ago.
That was just the last in a series of factories the company closed down in recent years as it failed to gain precious market share. What Samsung didn’t realize was betting on “low-cost smartphone manufacturing” in Vietnam instead of China would pay off handsomely in this unlikely but real scenario where a deadly disease has brought an entire industry to a halt.
The coronavirus impact on smartphone production in Vietnam has so far been “limited”, according to Reuters, which means Samsung’s global sales numbers should remain relatively steady through the end of the current quarter. But looking ahead, the world’s top smartphone vendor is likely to be affected by any prolonged issues, sourcing many components from China just like all its major (and minor) rivals.
The worst quarter in five years
After putting together a preliminary report about the coronavirus outbreak’s impact on the smartphone supply chain last week, TrendForce is back to detail and expand on its initial predictions. Q1 2020 global smartphone production is still expected to sit at 275 million units, down no less than 12 percent from the same period of last year to mark the industry’s lowest quarterly output within the past five years.
Even if the coronavirus outbreak will be contained by the end of February, which is by no means a guarantee, overall 2020 smartphone production is projected to reach around 1.38 billion units, representing a year-on-year drop of 1.3 percent and the lowest such total since 2016. If the disease keeps spreading, of course, there’s no telling how low these numbers could get, but then again, if the epidemic reaches pandemic proportions, who cares how much money the likes of Apple and Huawei stand to lose?
While praying that will never happen, you might be interested to know TrendForce is revising down its Q1 2020 production forecasts for other industries as well, ranging from smartwatches and smart speakers to notebooks, monitors, TVs, video game consoles, and even automobiles. At the same time, Digitimes Research is predicting a grand total of 1.278 billion global smartphone shipments for 2020, including “less than 200 million units of 5G models.”
If we compare that number to the 1.371 billion smartphones estimated to have been shipped worldwide in 2019 by the International Data Corporation, for instance, the market is looking at a 12 percent decline, but as highlighted by TrendForce analysts in the firm’s latest comprehensive report, the “mercurial” nature of the coronavirus epidemic makes it pretty much impossible to forecast even the near future of the mobile industry.