As we all know, under the impact of the new crown pneumonia epidemic, domestic mobile phone sales have plummeted. According to a report released by the China Academy of Information and Communications Technology, in February, the overall domestic mobile phone market shipments were 6.384 million units, a year-on-year decrease of 56.0%.

“I made 40,000 to 50,000 orders a day before, but now I only make more than 10,000 orders a day.” The company that Wang Hua (pseudonym) works for supplies mobile phone accessories to Samsung accessories factory. On March 24, Wang Hua told a reporter from China Business News that some orders for Samsung upstream OEM companies have been suspended.

This is due to the decline in mobile phone market demand. Due to the global spread of the new crown pneumonia epidemic, the overseas smartphone market has been hit. CICC expects that global smartphone bookings will decrease by 7% in 2020. In the second quarter, the impact of domestic and overseas epidemics overlaps, and global shipments will drop by 26% year-on-year.

Today, the mid-to-upstream supply chain of mobile phones has been affected. During the reporter’s investigation and interview in the smart phone industry cluster area in Dongguan City, a supplier reported to the reporter that “many foreign trade orders have stopped.” If overseas orders continue to decline, orders from factories will also decrease.

Previously, due to the impact of the domestic epidemic, the supply chain was delayed in resuming work and was hit by the first round of impact. After the resumption of work, the company planned to work overtime to catch up with production, but some projects were delayed due to the global epidemic and had to face the secondary impact of the epidemic.

An executive of a mobile phone supplier said, “The company is evaluating the impact of the overseas epidemic and does not need government assistance yet.” However, many industry insiders believe that the current terminal brands are facing greater difficulties than the upstream supply chain, especially sales.

Mobile phone shipments decline

In March, some mobile phone manufacturers reported that the domestic market has begun to bottom out.

OPPO told reporters that its Chinese factories have gradually resumed production, and the current resumption rate exceeds 90%. At the end of February, offline sales have returned to the same level as the same period last year, and online courses have stimulated demand for mobile phones and tablets. In addition, during the epidemic, the use of mobile phones has increased, and the demand for product experience has increased, stimulating new demand for replacement.

Liu Hong, vice president of vivo and president of the Chinese market, said that in terms of channels, although the epidemic had an impact on sales in February, it had recovered by more than 80% in early March.

But in overseas markets, the situation is not optimistic.

In the past two years, with the full demand of the domestic smartphone market, mobile phone manufacturers have chosen to “go overseas” one after another. According to a report released by Counterpoint, Samsung, Apple, Huawei, Xiaomi, and OPPO ranked the top five in the European smartphone market share rankings in the fourth quarter of 2019.

According to IDC statistics, in the fourth quarter of 2019, North America and Europe together accounted for about 41% of the total global smartphone sales, and sales were mainly through operators and offline channels, and online accounted for only about 10%, far lower than 31% in China.

Today, the epidemic situation in Europe, the United States and other overseas regions is severe, and Samsung, Apple and Huawei, which have a large share in the European and American markets, are affected. According to Gartner statistics, overseas markets account for about 47% of the total sales of mobile phone brands in China. According to data from Gartner and CICC Research, in 2019, Samsung’s mobile phone shipments accounted for 97% overseas, Apple accounted for more than 80% of overseas shipments, Huawei, OPPO, and vivo accounted for about 40% of overseas shipments, and Xiaomi’s overseas shipments accounted for about 40%. Shipments accounted for more than 60%. CICC predicts that overseas market demand will experience a sharp year-on-year decline of 30.9% and 10.5% in the second and third quarters of 2020.

Supply chain rhythm is disrupted

In the face of the new crown pneumonia epidemic, the global supply chain has been affected.

On March 23, the Indian government ordered a number of smartphone factories to stop production, including Samsung, OPPO and vivo. On March 25, foreign media reported that Apple’s manufacturing partners Foxconn and Wistron have suspended production at their Indian factories due to the outbreak.

Previously, in late February, Samsung and Hynix located in South Korea successively caused some factories to shut down due to the impact of the epidemic. If the epidemic in Japan and South Korea continues to spread, it may further affect the supply of raw materials upstream of the global electronics industry chain.

At home, the production rhythm of upstream suppliers has been disrupted due to shrinking demand in overseas markets.

Wang Hua told reporters that some orders for Samsung upstream OEM companies are currently suspended. “Our production capacity is no problem now, but the Samsung foundry that placed us orders is ‘out of stock’.” Wang Hua said that Samsung estimated that it would make four or five million orders a year ago, and plans to make one by March. Millions, but now 400,000 orders have not been fulfilled.

“They (Samsung foundries) only made more than 10,000 pieces a day, and 40,000 to 50,000 pieces the day before.” Wang Hua told reporters that the order was planned years ago, and now some production is delayed, so I dare not do it.

“But the contract for the assembly of the foundry has been signed, and Samsung has to consume it. Samsung also notified some orders not to be made for the time being.” Wang Hua said that at present, the employees of this factory do not have to work overtime on Saturdays because of the cost of temporary labor. Lower, in order to save costs, the factory’s labor policy is “to recruit temporary workers on the left, and regular workers on the right.” According to him, in order to catch up with workers on February 17, the factory’s recruitment policy was 24 yuan per hour for temporary workers, but now it has become 15 yuan per hour.

According to a person from a labor service company near the factory, the recruitment of many factories in Dongguan has been affected by the epidemic. “The labor price of a mobile phone optics factory has dropped from 24 yuan to 20 yuan per hour, and now it has stopped hiring again.”

“Now that the epidemic situation abroad is serious, those ordered products can’t go out, and many factories that do export have stopped.” According to a person from a labor service company in Dongguan, half a month ago, a company’s temporary workers were 20 yuan/hour. Although the peak recruitment period after the Spring Festival has passed, compared with previous years, there are a lot fewer jobs to choose from.

The company where Zhang Xin (pseudonym) works is located in Chang’an Town, Dongguan, and is a supplier of many mobile phone brands. According to his understanding, “orders for Xiaomi and OV (OPPO, vivo) have also been delayed by a third.” It’s not very busy now, all the orders from years ago are digested, and there are hardly many new orders.

In contrast, the impact of some big factories is not very obvious.

Luxshare Precision (002475.SZ) is located in the upstream of the industry chain and mainly produces connectors, acoustic and Electronic Modules and other products. Wang Laichun, chairman and general manager of the company, said that from the perspective of product lines, the company’s revenue from mobile phones accounts for 10%-15% of the overall revenue. “At present, the company has not received information on demand adjustment, but it is believed that demand will still be affected in the short term.” Wang Laichun believes that the current development trend of overseas epidemics is unclear, and it is too early to define the proportion affected. He estimates that in the first half of the year Mobile phones will be more affected, but the demand for computers and tablets is still relatively stable. Among them, tablets have an upward trend.

In the case of general setbacks in the industrial chain, there are also factories “desperately making inventory”. Wang Hua told reporters, “To do inventory now is to exchange cash for goods and store them in the warehouse. When the epidemic is over, the goods can be sold, but there is not so much liquidity.” He believes that a factory without strength is not a good choice. Dare to do inventory crazy.

Downgrade expectations again

Under the influence of the “butterfly effect” of the epidemic, the global economy is facing challenges, and major data agencies have lowered the production and sales data of the smartphone industry.

On March 24, TrendForce lowered its forecast for the total global smartphone production in 2020 to 1.296 billion units for the second time, a decline of 7.5% from last year. He also said that if the epidemic still fails to ease in the second half of the year, the magnitude of the recession may continue to expand.

CICC also lowered its smartphone market forecast for the second time, saying that global smartphone bookings will decrease by 7% in 2020. In the second quarter, the impact of the domestic and overseas epidemics overlapped, and global shipments fell by 26% year-on-year. The impact of the epidemic in China subsided in the third quarter, and the global growth rate was 5.9%, and the growth rate turned positive in the fourth quarter.

According to the latest update of global smartphone production data by TrendForce, the first revision of production in the first quarter of 2020 (referring to “the first downward revision of the forecast data from the Chinese New Year to the end of February at the beginning of the outbreak of the new crown pneumonia”) is as follows: 274 million units, with no change in the second revised data. However, in the second and third quarters of 2020, the revised data declined. This also means that the impact of the epidemic in Europe and the United States on smartphone production will begin to appear in the second quarter.

TrendForce analyst Huang Yuqin told reporters that the impact of the overseas epidemic on sales basically started in March, but because China, the main production place, was affected by the epidemic, the utilization rate in February (referring to the actual production quantity of a piece of machinery and the possibility of The ratio of the number of production to the production volume) is almost shut down, so the general direction of production in March is to make up for the market gap caused by the delay in resumption of work. To this end, the impact of the epidemic in Europe and the United States on production will start to appear from the second quarter.

TrendForce pointed out that the demand for end-use consumer electronics products will be directly impacted under the expectation of a sharp turnaround in the global economic performance. Among them, the impact on the smartphone industry is mainly reflected in: firstly, consumers’ desire for consumption has turned conservative, resulting in a backward deferral of demand and a further extension of the replacement cycle; ) decreased; third, due to the impact of the epidemic, the increase in personnel expenditures in the industrial supply chain and trade exchange differences, etc., will continue to deteriorate the profitability of the brand, and the market share may face a reshuffle.

Wang Hua also believes that the smartphone market is more competitive under the epidemic, and the mobile phone market may face a reshuffle this year. If the overseas sales of Huami ov (Huawei, Xiaomi, OPPO, vivo) decline, they will find ways to expand domestically. market. If there is no epidemic, overseas markets will undoubtedly be the key markets for Chinese mobile phone manufacturers to collectively exert their efforts this year.

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