Industry Analyst Scales Back 2019 Smartphone Shipment Forecast on Trade Uncertainties
Canalys expects 2019 smartphone shipments to decline 3.1 percent to 1.35 billion units, a downgrade from an earlier forecast it said was necessitated by various trade "uncertainties," including the Trump administration's recent actions involving equipment maker Huawei. The forecast assumes stringent restrictions will be imposed on Huawei, after a 90-day reprieve expires that will have a “significant impact on the company’s ability to roll out new devices in the short term, especially outside of China.” Canalys said Huawei is acting to mitigate the effect of component and service supply issues but expects overseas potential to be “hampered for some time.”
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
Forecasts reflect what will happen without major political changes. “Market uncertainty is clearly prompting vendors to accelerate certain strategies to minimize the short- and long-term impact in a challenging business environment, for example, shifting manufacturing to different countries to hedge against the risk of tariffs,” analyst Nicole Peng said: “But with recent US announcements on tariffs on goods from more countries, the industry will be dealing with turmoil for some time.” Canalys sees other major smartphone vendors, led by Samsung, having short-term opportunities “while Huawei struggles.” Samsung’s "aggressive device strategy" and ability to ramp production quickly will give it an advantage, but it may “struggle to entirely fill the shortfall,” analyst Rushabh Doshi said, saying other vendors won’t be able to react to new opportunities until late 2019: “Samsung’s control over component supply gives it a major advantage."
By next year, most of the major mobile supply chain and channel will have active contingency plans to mitigate Huawei’s decline and be ready for 5G device rollout in many markets, Doshi said. Canalys anticipates 5G and other hardware innovations will be “positive drivers” for consumer demand, and smartphone shipments globally are expected to return to “soft growth” in 2020, rising 3.4 percent to 1.39 billion. Some regions will recover faster than others, Doshi said. “Smartphone fatigue and a lack of meaningful innovation are still major market forces,” the analyst said, noting consumers are holding on to phones longer: “But as device lifecycles move toward a new equilibrium point, the rate of quarterly shipment decline will ease.”