Canalys 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 threatened tariffs and its recent crackdown on Huawei. It…
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said the forecast assumes stringent restrictions will be imposed on Huawei, bringing a “significant impact on the company’s ability to roll out new devices 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.” 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,” said analyst Nicole Peng: “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,” said analyst Rushabh Doshi, 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,” said the analyst, 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.”