Smartphone sales in China are expected to drop by as much as an alarming 50 percent in Q1 2020, given that several retail stores have remained closed for a long time. To make matters worse, production hasn’t resumed fully citing the coronavirus crisis, research reports say.
The virus outbreak has claimed more than 1000 lives and disturbed China’s manufacturing industry. Huawei and other popular Chinese smartphone manufacturers were gearing up for the country’s 5G rollout this year in a bid to help the world’s largest smartphone market make a comeback after a long period of declining sales.
Last week in a note, research firm Canalys said, “Vendors’ planned product launches will be canceled or delayed, given that large public events are not allowed in China.” The note points out that vendors will need more time to adjust the roadmaps for their product launch in China, which is likely to put a damper on 5G shipments.
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While Canalys predicts China’s smartphone shipments to drop by 50 percent in the first quarter from last year, IDC (International Data Corporation), on the other hand, expects a 30 percent drop. For those unaware, IDC is a research firm that monitors the tech sector.
Last week, Apple Inc announced its plan to extend the suspension of its retail store in China and said it hasn’t decided when they will re-open, since Foxconn, which assembles iPhones, is struggling to fully restart work at its factories. Although Foxconn got a stamp of government’s approval to restart production at a plant located in Zhengzhou, its more important plant in Shenzhen is still closed.
Without providing more details, Huawei, which is touted China’s biggest smartphone vendor, said the manufacturing capacity of the company is “running normally”. Just like the rest of the local companies, Huawei too relies on third-party manufacturers when it comes to production.
According to analysts, factories must resume production to their full capacity without delay, as this could hamper brands’ ability to make their latest products available in the market. Keeping in line with that, China’s popular Android brands including Xiaomi, Huawei, and Oppo are all slated to unveil their flagship devices in Q1 2020.
Despite the virus affecting operations at a few local factories, Oppo told Reuters that “manufacturing capacity can be guaranteed effectively” as it has plants located overseas as well. Xiaomi; however, refrained from responding to requests for comment.
IDC analyst Will Wong said, “The delays in reopening factories and the labor return time will not only affect shipments to stores, but it will also affect the product launch times in the mid- and long-term.”
On Monday, research firm TrendForce revealed that smartphone production on a global scale will drop by 12 percent in the March quarter, which converts to a five-year love of 275 million units. The research firm readjusted iPhone production by 10 percent to 41 million units, while Huawei’s production forecast was revised down to by 15 percent to 42.5 million units.
The world’s top handset maker, Samsung is likely to be the least affected by the coronavirus outbreak, as its major production plant is based in Vietnam. The report forecasts, Samsung could lower its production by a mere 3 percent to 71.5 million phones.
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(Source)
