Global Smartphone Sales Bottom in April
The author is an analyst of NH Investment & Securities. He can be reached at kyuha.lee@nhqv.com.
Smartphone sales plummeted in April due to global shutdowns owing to the Covid-19 outbreak. However, as major markets have begun to open from May, sales are set to recover. We recommend increasing exposure to handset/IT parts plays, noting likely demand improvement in 2H20.
Global smartphone sales bottom in April
Global smartphone sales came to 69.37mn units (-40.9% y-y, -22.5% m-m) in April, expanding the y-y decline seen in March. Considering that the global lockdown began at end-March, we believe that smartphone sales bottomed in April. Moreover, despite the short-term sales slump, we recommend increasing exposure to handset/IT parts plays, believing that global smartphone demand will improve in 2H20 on the fading Covid-19 crisis and stimulus policies from individual countries.
By region, India saw its smartphone sales plunge to 290,000 units (-97.4% y-y) in April, as it was virtually impossible to sell handsets due to a nationwide lockdown. Major smartphone markets, including the US and Europe, also saw sales declines of 40~50% y-y. However, with the lockdowns gradually being lifted from May, economic activity is resuming and smartphone sales look set to improve.
Among global smartphone makers, Samsung Electronics (SEC) and Xiaomi, which have high market shares in India, recorded noticeable sales drops. SEC’s April sales amounted to 13.22mn units (-47.3% y-y, -29.0% m-m). However, with sales in India likely to resume from May, the company’s monthly sales should recover. By model, April sales of the Galaxy S20 series reached 4.03mn units, showing a decrease of 27.4% compared to S10 series. Meanwhile, Galaxy Z Flip sales came in at 160,000 units (-32.7% m-m).
Apple’s April smartphone sales slid to 8.23mn units (-37.2% y-y, -18.9% m-m). In China, the firm’s sales rose 10.6% y-y thanks to price cuts, but global sales plunged on the shutdown of Apple stores in major markets, such as the US and Europe. That said, with Apple stores reopening in the US and Europe from May, the company’s sales should recover m-m.
Share price momentum to expand on new product launches in 2H20
We note that SEC is expected to release the Galaxy Note 20 series and Galaxy Fold 2 in August, and Apple is due to release the iPhone 12 series in October. Related-companies should experience increased share price momentum in the run-up to the launches.