The smartphone industry is facing a recession due to a number of factors in the past few weeks. A prime reason for that is the Coronavirus epidemic in China. It was expected that the epidemic will have economic consequences, but we are finally coming to know about the extent of it. A leading analyst today released a research article highlighting the recession faced by the smartphone industry.
Tianfeng International analyst Mingming Guo, in his research article said that iPhone’s shipment forecast for Q1 will be down to 36-40 million units. That’s a 10% decline as compared to the previous quarter. He highlighted the three major problems being faced by smartphone brands. They are as follows:-
(1) China ’s mobile phone shipments will be lower than market expectations;
(2) 5G mobile phones will contribute less than expected for Android brand replacement needs;
(3) iPhone supply In Q1 2020, due to the outbreak of pneumonia, shipments were lower than expected
The first and third risks are directly related to the coronavirus outbreak. The coronavirus outbreak has apparently dwindled people’s confidence on the Chinese market. The overall mobile phone market is expected to witness a decline of 15% to 310-330 million. The decline in shipments will also lead to high inventory levels.
5G Fails To Increase Replacement Demand
To make things worse, the sales of 5G mobiles have not been up to the mark. The replacement demand is way below what was expected for the 5G mobiles in the higher-end spectrum. Both Huawei’s and Samsung’s demand for mobile phone shipments fell by 5-10% to 69 million and 23 million units respectively.
It is further noted that it is difficult to forecast the figures for the upcoming quarter, because of the uncertainty around the epidemic. Whether or not the epidemic has long-lasting effects on the iPhone’s consumer confidence remains to be seen.