Notebook, Smartphone Supply And Demand In China Hit By Outbreak

The notebook and smartphone sectors are both expected to be undermined by China’s coronavirus outbreak in the first quarter of 2020 as local consumer demand has been significantly weakened, while supply is also likely to be hindered due to government measures for containing the epidemic, according to sources from upstream supply chains.

China-based Huawei, Oppo, Vivo and Xiaomi all stocked extra smartphone inventory at the end of 2019 in a bid to boost their annual shipment performances in 2019 and had originally expected to deplete them during the Lunar New Year holidays. However, with consumer demand in China significantly impacted by the outbreak and the fact that the first quarter of 2020 is the traditional slow season, most of the brands currently still see high inventory levels.

On the other hand, high-end smartphone cameras, which were in seriously shortages in the fourth quarter of 2019, are now seeing supply supply in the first quarter of 2020.

Since China’s consumer demand will be hit by the outbreak, smartphone component makers, who have been keen on expanding capacity recently, may need to start reducing prices to maintain their competitiveness if demand there does not recover in the near future.

Notebook shipments from the upstream supply chain is expected to slip another 10% in the first quarter of 2020 because of epidemic-related issues, such as lockdown of cities and disrupted transportation that are stalling material and component supplies and preventing workers from returning to work.

However, semiconductor manufacturers in China’s Wuhan, which is currently in a lockdown, are permitted to ship their products out of the city, reducing the impacts on them.―Digitimes