The global smartphone market will be hit hard this year by the outbreak of new crown pneumonia. The research institute predicts that global smartphone shipments will fall by 12% this year, largely due to consumer confidence. Against this backdrop, Apple has launched a new round of price cuts in China.
Weak consumer confidence is offset by lower prices
Global smartphone shipments are expected to reach 1.2 billion units this year, down nearly 12 percent from a year earlier, according to the latest data released Wednesday by IDC, a market research firm. The outbreak of new crown pneumonia has not only hit the supply chain of the market, but has also damaged consumer confidence.
Sangetika Srivastava, senior research analyst at IDC, said: “Short-term sales of smartphones are under pressure as unemployment caused by the outbreak has hit consumer confidence and consumer spending is biased towards necessities. “
This is the second time this year that IDC has cut its global smartphone shipping forecast. In early February, IDC forecast that smartphone sales would fall 2.3 percent in 2020, with shipments of just over 1.3 billion units.
IDC also earlier predicted that global smartphone shipments would fall 10.6 percent year-on-year in the first half of this year, and that global shipments could grow again in 2021, partly because of more market focus on 5G. In addition, manufacturing and logistics will take several quarters to recover.
Global smartphone production has fallen by 10 per cent in the first quarter of this year. Global smartphone production will accelerate by 16.5 per cent in the second quarter, according to TrendForce, a research firm. It also expects global smartphone shipments to fall 11.3 percent to 1.24 billion units this year.
But the smartphone market is expected to pick up in the second half, boosted by demand from Apple’s 5G handset. According to research firm Counterpoint Research, 5G handsets will account for as much as 40 per cent of China’s handsets this year, but that also means manufacturers will face stiff competition in the 5G market.
The previous outbreak has had an impact on the financial position of Apple and Samsung in the first quarter. As Apple was forced to close stores in the U.S. and Europe, the company bet bigger on the Chinese market. Recently, Apple announced a new round of price cuts for older models.
First Financial reporter noted that apple’s multiple e-commerce channels, including Alibaba Tmall and JD.com, have further lowered the price of iPhones. On The Tmall, the iPhone 11 models have been cut by 13%, with the iPhone 11 (64G) model being cut from 5,499 yuan to 4,779 yuan, and the iPhone 11 Pro starting at 8 yuan. The price of the iPhone 11 Pro Max was lowered to $8,359 from $9,599, while the starting price of the latest low-priced iPhone SE model fell to $3,099.
The promotional prices on the JD.com platform on June 1 showthat that the price of the iPhone 11 (64G) and the iPhone 11 Pro was adjusted to 4,599 yuan and 6999 yuan, respectively, and that the iPhone 11 Pro Max would be reduced by more than 20% if the full discount was included, at a price of just 7,499 yuan.
The price cuts have boosted JD.com’s sales, with BOE revealing that trading volumes tripled in the hour after the promotional price was launched on June 1. But prices on Apple’s official website have not been adjusted.
In general, Apple has strict control over the price of third-party platforms, and while price cuts on e-commerce platforms are common, apple prices are rare at its official flagship storeon on e-commerce platforms. Analysts say Apple wants to boost switch-off demand for some older iPhone users by cutting prices.
Peng Luping, an analyst at Canalys, a research firm, told First Financial: “Low-cost iPhones are attracting more attention in the current economic climate, and some users don’t want to spend more on their budgets than they used to, but they still have the need to switch machines and keep them down.” “
iPhone China sales rebound
Apple’s sales in China rebounded strongly in April. Apple shipped 3.9 million units in China in April, up 160 percent from March, according to Research Research. Apple’s shipments to channel providers reached 3 million units in April, up about 30 percent from March, according to data from channel providers released by IDC.
Despite a decline in overall shipments of China’s smartphone market in the first quarter of this year, statistics show that Apple and Huawei are accelerating their grip on china’s declining smartphone market share.
Shipments of china’s smartphone market fell 18 percent to 72.6 million units in the first quarter as a result of the outbreak, according to an earlier report by Canalys. Huawei’s market share rose to 41.4% from 33.9% a year earlier, while overall shipments rose 1 percent to 30.1 million units in the first quarter.
Apple’s shipments in China fell more than 4 per cent, but its market share in China rose to 8.5 per cent from 7.3 per cent a year ago. Apple CEO Tim Cook said at last quarter’s earnings briefing that sales in China were “on track.”
However, Apple’s market share in China still lags behind that of local handset makers OPPO, vivo and Xiaomi, with OPPO and Xiaomi both with 26% and Vivo 19%.
Analysts say weak consumer demand is more pressure on Apple’s sales than the impact of the outbreak on the supply chain. Tianfeng Securities has previously cut its second-quarter shipment outlook for Apple’s iPhone to 29 million to 32 million units, down 20 to 25 percent from a year earlier.
“We believe Apple’s executive power minimizes the risk of any delay in development and mass production, and advises investors to pay more attention to the impact of the consumer downgrade on iPhone demand.” Tianfeng Securities wrote in the report.
The blow to consumer confidence from the outbreak could also delay consumer demand for 5G handsets. “We are cautious about the overall picture of China’s smartphone market this year, and there is still a lot of uncertainty for handset makers,” Peng Luping of Canalys told First Financial. “
The widespread expectation that Apple’s 5G handset is largely constrained by the supply chain and may be delayed. At the same time, Apple is facing stiff competition from Android phone makers. Local Chinese manufacturers, including Huawei and Xiaomi, have launched 5G handsets and are hoping that they will spur consumer demand for switching.
Canalys expects China to ship 326 million smartphones this year, including 137 million 5G smartphones, in the best-case scenario.
First Financial reporters previously obtained information from a Chinese brokerage that the second half of this year, Apple will launch three iPhone models are the iPhone 12, iPhone 12 Pro and iPhone 12 Pro Max, three phones this year is expected to stock a total of 90 million units, some of which use sub 6 (low to medium band spectrum), and a small use of sub 6 plus mm wave.
Apple plans to produce about 213 million iPhones in the 12 months to March 2021, up 4 percent from a year earlier, according to a report by the Nikkei news agency quoted the company as saying.