Global Smartphone Demand Recovering
The author is an analyst of NH Investment & Securities. He can be reached at kyuha.lee@nhqv.com. -- Ed.
Global smartphone sales recorded a clear recovery in June from April’s bottom. In particular, SEC appears to be benefiting from both US sanctions against Huawei and boycotts of Chinese products in India. We advise paying attention to related components suppliers.
Entering clear smartphone demand recovery
Global smartphone sales reached 110.02mn units (-7.4% y-y, +32.7% m-m) in June, reducing the scale of y-y decline and achieving a second consecutive month of q-q increase. In our view, global smartphone sales are clearly seeing a demand recovery following April’s bottom. We expect that smartphone sales in July will arrive similar to or slightly improved versus the June figure. Although the further spread of Covid-19 remains as a variable, we maintain a Positive outlook on the handset/IT components industry, considering both Samsung Electronics (SEC)’s smartphone M/S recovery trend and major firms’ plans to launch new products in 2H20.
By region, smartphone sales in India reached 14.73mn units (+8.3% y-y, +254.1% m-m) in June, recording the first y-y increase in four months. It is also encouraging that smartphone sales in the US achieved the first y-y gain since Oct 2019. Meanwhile, smartphone sales in China continued to decline y-y.
By company, SEC sold 23.26mn units (-10.6% y-y, +40.1% m-m) in June, significantly improving upon the previous month’s figure and claiming its highest M/S since Feb 2020. We attribute the rosy result to SEC’s M/S growth in India (from 17.5% in May to 26.2% in June), following boycotts of Chinese products in the country. We also see the decrease in Huawei’s global M/S due to US sanctions as playing a favorable role. In June, Apple sold 14.17mn units (+30.2% y-y, +28.4% m-m), recording sound sales on strong sales of its low-end iPhone SE lineup and effects of ‘618’ price discounts in China.
SEC’s new model launches and sales recovery positive for related components suppliers
We believe it is positive for SEC-related components makers that: 1) SEC is expected to hold an Aug 5 unboxing event to unveil its new models, including the Galaxy Note 20 series and Galaxy Z Fold 2; and 2) SEC should continue to benefit from both US sanctions against Huawei and boycotts of Chinese products in India. We recommend SEMCO, KH Vatec, Segyung Hi-tech, and Fine Technix.