China's First-Quarter Smartphone Sales May Halve Due to Coronavirus: Analysts

Canalys expects China's smartphone shipments to halve in Q1, while IDC forecasts a 30 percent drop.

By Reuters | Updated: 10 February 2020 18:05 IST

China's First-Quarter Smartphone Sales May Halve Due to Coronavirus: Analysts

Canalys expects China's smartphone shipments to halve in the first quarter

Highlights

China's smartphone sales may plunge by as much as 50 percent
Many retail shops have closed for an extended period
Production has yet to fully resume due to the spread of coronavirus

China's smartphone sales may plunge by as much as 50 percent in the first quarter, as many retail shops have closed for an extended period and production has yet to fully resume due to the fast spread of a new coronavirus, according to research reports. The virus outbreak, which has killed more than 900 people and roiled China's manufacturing industry, comes as top smartphone vendors such as Huawei had hoped China's 5G rollout plans this year would help the world's biggest smartphone market rebound after years of falling sales.

"Vendors' planned product launches will be cancelled or delayed, given that large public events are not allowed in China," research firm Canalys said in a note last week.

"It will take time for vendors to change their product launch roadmaps in China, which is likely to dampen 5G shipments."

Canalys expects China's smartphone shipments to halve in the first quarter from a year ago, while IDC, another research firm that tracks the tech sector, forecasts a 30 percent drop.

Apple said last week it is extending its retail store closures in China and has yet to finalise opening dates, as Foxconn, which assembles iPhones, struggles to fully resume factories.

Foxconn received government approval on Monday to resume production at a plant in the city of Zhenghzou, but its major plant in Shenzhen remain unopened.

Huawei, China's biggest smartphone vendor, said its manufacturing capacity is "running normally" without specifying further. But like many other local peers, Huawei relies heavily on third-party manufacturers for production.

If factories cannot resume production to full capacity on time, this could delay brands' ability to bring their newest products to market, analysts said.

Xiaomi, Huawei, and Oppo, three of China's top Android brands, are all expected to announce flagship devices in the first half.

Oppo told Reuters that while the impact of the virus will affect operations at some local factories, "manufacturing capacity can be guaranteed effectively" thanks to its plants overseas.

Xiaomi did not respond to requests for comment.

"The delays in reopening factories and the labour return time will not only affect shipments to stores, it will also affect the product launch times in the mid- and long-term," Will Wong, an IDC analyst, said.

Globally, smartphone production will decrease by 12 percent in the March quarter to a five-year low of 275 million units, research firm TrendForce said on Monday. It revised down iPhone production by 10 percent to 41 million units, while Huawei's output forecast was cut by 15 percent to 42.5 million phones.

Samsung Electronics, the world's top smartphone maker, is seen the least affected by the virus outbreak as its main production base is in Vietnam, the report said, lowering its production forecasts by just 3 percent to 71.5 million units.

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