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Coronavirus outbreak to hit global smartphone output to five-year low

(Image credit: Future)

The impact of the coronavirus outbreak in China is weakening the global smartphone production in the first quarter of this year to a five-year low.

According to research firm TrendForce, the first-quarter production is expected to decline 12% year on year to 275m units.

The market leader – Samsung – is the least impacted from the outbreak as the Korean giant main production units are in India and Vietnam but it sources some of its components from China.

So, the research firm has reduced Samsung’s production forecast by 3% to 71.5m units.

Huawei, which ranks second in terms of quarterly production volume, was placed on the US Entity List and subsequently prevented from installing GMS on their newer models, lowering their overseas sales. Turning to a business model that heavily focuses on the Chinese market, Huawei sustained major losses under stagnant Chinese New Year sales numbers. Owing to losses in both domestic and overseas markets, Huawei is projected to produce 42.5 million units in the first quarter, a 15% decrease.

Third-placed Apple’s production forecast is reduced by about 10% to 41m units.

In the short term, TrendForce expects Apple to face uncertainties in its labour force’s work resumption, and the supply of certain key components involved in the production of new iPhones cannot be properly delivered. These setbacks will directly affect the upcoming release of iPhone SE2.

Fourth-ranked Xiaomi, which primarily relies on online sales with a relatively low market share in China at about 9%, is expected to decrease by 10% to 2.47m units while Oppo to face 14% decline to 2.4m and Vivo by 15% to 1.7m units.

In terms of yearly outlook, as long as the outbreak can be controlled and a basic level of demand can be supported by the overall global economy, TrendForce believes that most demand is deferred rather than eliminated and therefore does not have an overly pessimistic outlook towards smartphone production in 2020.