Samsung the Only Player to Increase Market Share in July
The author is an analyst of NH Investment & Securities. He can be reached at kyuha.lee@nhqv.com. -- Ed.
Global smartphone sales fell only 2.6% y-y in July, recording the smallest monthly y-y drop thus far in 2020. Of particular note, SEC achieved its strongest M/S of the past year, excluding February. The firm’s M/S is expected to continue recovering in 2H20.
Global smartphone sales showing gradual recovery trend
Global smartphone sales reached 115.2mn units (-2.6% y-y, +4.7% m-m) in July, narrowing the scale of y-y decline and achieving a third consecutive month of q-q growth. Among smartphone makers, SEC was the only player to see its M/S climb in July. We expect related domestic parts suppliers to benefit overall.
By region, smartphone sales in the US and India recorded a second consecutive month of y-y increase. While smartphone sales in China are still showing y-y decline, the scale of deterioration is gradually easing. It is expected that demand for smartphones in major countries will enjoy a gradual recovery in 2H20, helped by the onset of the shopping season and the release of new products.
By company, SEC sold 25.09mn units (-5.3% y-y, +7.9% m-m) in July, continuing its m-m increase. We believe that SEC’s smartphone sales are benefiting from both boycotts of Chinese products in India and US sanctions against Huawei. In addition, with sales of the Galaxy Note 20 series (released in August) outperforming expectations, SEC is projected to see ongoing expansion in its smartphone M/S.
Ongoing rise in SEC’s smartphone M/S looks positive
While the growth momentum of Chinese companies has weakened as of late, weighed upon by the possibility of additional US sanctions against Huawei and further boycotts in India following an expansion of anti-China sentiment, SEC and Apple are realizing related benefits.
Of particular note, excluding February (when sales plunged overall amid the impact of Covid-19), SEC recorded its highest M/S since Jul 2019. We expect SEC’s M/S to remain on the rise in 2H20, helped by increased sales of both new products and low/mid-end offerings.
While SEC smartphone-related parts makers are forecast to benefit overall, we expect the primary beneficiaries to be: 1) companies which have a high sales portion towards SEC’s low/mid-end handsets, such as MCNEX and Partron; and 2) firms related to the Galaxy Z Fold 2, including KH Vatec, Segyung Hi-tech, and Fine Technix.