2H23 Outlook
The author is an analyst for NH Investment & Securities. He can be reached at kyuha.lee@nhqv.com -- Ed.
In 2023, we expect global smartphone shipments to contract 2.2% y-y to W1.2bn units, affected by global macro impacts and a reduction in smartphone replacement demand. But, unlike in 1H23, smartphone demand is anticipated to pick up in earnest from 2H23, helped by new product launches (iPhone 15 series, Galaxy Z Flip/Fold 5, etc) in 3Q23 and base effect.
For the smartphone segment, which has seen slowing growth, market expansion is to be led by foldable smartphones. We expect the rise of the foldable smartphone market to be largely driven by Android phone makers (Chinese makers, Google) first before picking up speed over the long term upon the joining of Apple.
We prefer players that are well-positioned to gain from IT demand improvement in 2H23. In line, we recommend: 1) LG Innotek, a likely beneficiary of solid sales of Apple’s iPhone 15 series and the blooming of the XR device market; 2) SEMCO, a firm standing to benefit from smartphone demand recovery in China; and 3) LG Electronics, a beneficiary of strengthening global home appliance/TV demand and the ongoing expansion of automotive electronics.