The demand for smart phones in the formerly hot Chinese market is rapidly cooling down, because the recovery of the pandemic has weakened consumer spending, prompting mobile phone manufacturers including apple to warn about future performance in recent weeks, and chip manufacturers to change their views on the world's largest smart phone market According to the data released this week by the China Academy of information and communications, China's smartphone shipments in April fell 34% year-on-year to 17.7 million. The Institute said that in the first four months of this year, the shipment volume decreased by 30% to about 86million units. The Institute is subordinate to the Ministry of industry and information technology.
At the end of April, apple warned that covid-19 prevention and control measures may hinder sales in this quarter, involving as much as $8billion. This month, Xiaomi, a Chinese smartphone manufacturer, said that its smartphone revenue from January to March fell by 11% compared with the same period last year, partly due to China's logistics slowdown, store closures and parts shortages, all of which stem from the strict anti epidemic sealing and control policies.
SMIC international integrated circuit manufacturing Co., Ltd., the largest contract semiconductor manufacturer and smartphone chip manufacturer in China, said this month that it now expects global smartphone manufacturers to reduce the production of at least 200million smartphones in 2022 compared with industry forecasts. Zhaohaijun, the joint CEO of SMIC, said that most of these cuts came from Chinese mobile phone manufacturers. "There is no end to the downward trend," Mr. Zhao said on the earnings conference call
The sharp drop in demand for smartphones has also had an impact on global electronics manufacturers. According to trendforce, a research company in Taiwan, China, the shipments of smart phones in Chinese Mainland account for about one fifth of the world.
Consumers say they are tightening their purse strings, especially for higher priced goods. Zhang Rui, a 43 year old science and technology worker in Beijing, said she gave up her plan to buy a new smartphone this year. Ms. Zhang uses iphone 12 Pro max, who usually updates the device every other year, said that she was not attracted by the new model to the extent that she was willing to pay a high price.
According to industry executives and analysts, low-end devices may be the fastest and most severely hit, because consumers with low income and inclined to buy cheap mobile phones have to limit their purchase desire in the face of economic uncertainty.
Guomingpei, a supply chain analyst at Tianfeng international securities in Hong Kong, said that this trend may hurt some companies including Xiaomi, oppo and vivo the most. At the same time, Apple's product line tends to be high-end products, although the sales of its lower priced iPhone se may also be impacted, he said. Major smartphone manufacturers in China, including Xiaomi, oppo and vivo, saw their smartphone shipments fall by about 270Million units this year compared with previous industrial forecasts.
For Smartphone manufacturers and their suppliers, the decline in Chinese consumer demand has made it more difficult for them to solve a series of problems, including the shortage of chips and the impact of Russia's war on Ukraine.
According to trendforce, from January to March, the global smartphone market fell by 7% compared with the same period of the previous year. The company predicts that the world will produce 1.33 billion smartphones in 2022, and this year it has cut its forecast by 50million twice.
Some of the largest suppliers of apple and other smartphone makers have also issued warning signals. Foxconn Technology Group, the world's largest iPhone assembler, predicts that the revenue of consumer electronic products, including smartphones, will decline in this quarter compared with the same period last year. The Department accounts for more than half of the company's revenue. TSMC said in April that the growth of chips used in consumer electronic products, including smartphones, was weakening.
Analysts said that although China's demand for mobile phones has declined, the global chip shortage is unlikely to ease in the short term. Industry executives said that the automotive industry is still trying to solve the problem of chip shortage, but it is regrettable that it is difficult for semiconductor manufacturers to quickly shift production from one type of chip to another, and the supply of smart phone chips used to power equipment, charge and access Wi Fi networks may continue to face supply constraints.