Handset Components Suppliers Conservative About 1Q20 Revenues

Taiwan handset supply chain players are conservative about their first-quarter 2020 revenues due to seasonality and the coronavirus outbreak, with their Chinese clients seeing high inventory levels, according to industry sources.

The sources said channel distributors for Chinese handset vendors were racing to stockpile inventories in the fourth quarter of 2019 anticipating strong buying sentiment during the Lunar New Year holidays. But the virus outbreak has seriously dampened consumer demand in China, where transportation has been disrupted and some big cities have been locked down.

If the outbreak fails to be contained in the near future, many Chinese handset vendors may stop or postpone development of new models and even directly cut orders with components suppliers, the sources said, adding that most handset supply chain makers have been prepared for a lackluster first quarter.

Handset camera lens makers including Genius Electronic Optical, Asia Optical, Newmax Technology and Ability Opto-Electronics Technology have all informed their clients that they will reschedule shipments as their plants in China will not resume operations until at least February 10, the sources said.

Chinese handset vendors have also canceled or postponed product launches in the wake of the outbreak, with Xiaomi set to promote its new offerings via online streaming.―Digitimes