SEC's Smartphone Shipments to Jump 31% HoH in 2H20
The author is an analyst of KB Securities. He can be reached at cm.lee@kbfg.com. -- Ed.
Five new products unveiled at Samsung Unpacked event
At the Samsung Unpacked event on Aug 5, five new products slated for launch in 2H20 were unveiled: two smartphones (Galaxy Note 20 and Galaxy Z Fold 2), a smartwatch (Galaxy Watch 3), wireless earphones (Galaxy Buds Live) and a tablet PC (Galaxy Tab S7).
(1) Galaxy Note 20: This smartphone (Aug 5 release) comes in the regular 6.7” version and the ultra 6.9” with factory prices of KRW1.20mn and KRW1.45mn, respectively (vs. Galaxy Note 10/Galaxy Note 10 Plus at KRW1.25mn/KRW1.4mn). The ToF camera, which has been used in flagship models since 2019, is not included; we attribute this to the camera’s limited use and the company’s push to lower manufacturing costs.
(2) Galaxy Z Fold 2: The main/cover displays have expanded to 7.6”/6.2”. Detailed specs and factory prices will be presented in early September.
(3) Galaxy Buds Live: These are the first wireless earphones with SEC employing active noise cancellation. They are set to launch on Aug 6 at KRW200,000.
Smartphone shipments to jump 31% HoH in 2H20
SEC’s 2H20 smartphone shipments should come in at approx. 150mn units, representing about a 30% HoH increase from approx. 110mn units in 1H20. Marketing activity for new products will go into high gear to compensate for tepid 1H20 performance. In terms of 2H20 sales volume, we forecast Galaxy Note 20 at 8.6mn units (or 4% less than the Galaxy Note 10) and foldable phones (incl. Galaxy Z Fold 2) at 1.3mn units (+225% YoY). We think SEC is well positioned to benefit from:
(1) Huawei’s disrupted AP production amid U.S. government sanctions
(2) The COVID-19 pandemic giving rise to growing anti-Chinese sentiment
(3) India’s boycott of Chinese products following a cross-border dispute
BH and Wisol also stand to benefit from these developments.
Wireless earphones to enjoy greater presence in 2H20
SEC’s 2020 wireless-earphone shipments are estimated to increase more than twofold YoY to 25mn units (vs. 7.63mn in 2019), boosting the company’s share of the global market (6% in 2019→10% in 2020).
(1) Shipment growth for Galaxy Buds Plus (unveiled in February at KRW180,000) has been solid, backed by the product’s enhanced battery and promotional activity. SEC’s 1Q20 wireless-earphone shipments reached 1.35mn units (+250% YoY).
(2) There are high hopes for Galaxy Buds Live, which is SEC’s first wireless earphone featuring active noise cancellation. This function, which led to the success of Apple’s AirPods Pro, could spearhead company-wide shipment growth.
SEC’s flagship smartphones have been without earphone jacks since 2H19, so rising smartphone demand should translate into growing wireless-earphone sales. Considering this, ITM Semiconductor (084850), which is the global No. 1 maker of secondary battery protection circuit modules, stands to benefit.