Tuesday, 04 June 2019 05:16

US-China spat seen pushing smartphone shipments down by 3.1% in 2019

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US-China spat seen pushing smartphone shipments down by 3.1% in 2019 Pixabay

Smartphone shipments in 2019 are predicted to reach 1.35 billion units, a year-on-year fall of 3.1%, the research firm Canalys says, adding that this reflects a lowered forecast due to the increasing uncertainty that a trade deal will be reached by the US and China.

The company said it had assumed that once the 90-day grace period given to the Chinese vendor Huawei expired, it would be difficult for it to roll out new devices as before, especially outside China.

"Canalys anticipates that Huawei is taking steps to mitigate the effect of component and service supply issues, but its overseas potential will be hampered for some time," Canalys said in a statement on Monday.

"The US and China may eventually reach a trade deal to alleviate the pressure on Huawei, but if and when this will happen is far from clear."

The company said its published forecasts reflected what would happen if there was no political change.

“It is important to note that market uncertainty is clearly prompting vendors to accelerate certain strategies to minimise the short- and long-term impact in a challenging business environment, for example, shifting manufacturing to different countries to hedge against the risk of tariffs," Nicole Peng, Canalys' vice-president of Mobility, said.

canalys full2019

"But with recent US announcements on tariffs on goods from more countries, the industry will be dealing with turmoil for some time.”

Canalys research director Rushabh Doshi said it was expected that other major smartphone vendors would have short-term opportunities while Huawei struggled.

"Samsung will be the biggest winner, thanks to its aggressive device strategy and its ability to quickly ramp up production, through the South Korean firm may struggle to entirely fill the shortfall,” he said.

“It will take other vendors until late 2019 to react to the new opportunities. Samsung’s control over component supply gives it a major advantage.”

By next year, Canalys said it anticipated that a majority of the mobile supply chain and channel would have active contingency plans to mitigate Huawei’s decline and be ready for 5G device rollout in many markets.

It expected that 5G and other hardware innovations would be positive drivers for consumer demand and smartphone shipments globally were expected to return to soft growth in 2020, rising 3.4% to 1.39 billion, with some regions recovering faster than others.

“Smartphone fatigue and a lack of meaningful innovation are still major market forces. Consumers are holding onto phones for longer. But as device lifecycles move toward a new equilibrium point, the rate of quarterly shipment decline will ease,” said Doshi.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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