Only Confirmed Smartphone Sales Drop Is for Huawei
The author is an analyst of NH Investment & Securities. He can be reached at kyuha.lee@nhqv.com. -- Ed.
Global smartphone sales have achieved a y-y increase for the first time since Sep 2019, with only Huawei’s smartphone sales showing a fall. While global sales are expected to recover in 2H20, Huawei’s smartphone sales decline is expected to worsen. SEC’s smartphone sales and related component makers stand to benefit.
Global smartphone sales see first y-y rise in 11 months
Global smartphone sales in August achieved a y-y rise for the first time since Sep 2019. Most companies recorded increases, with Huawei being the sole decliner. Huawei’s sales are expected to further deteriorate going forward, affected by both problems with securing key components and by rivals’ strengthening promotion. SEC-related smartphone component makers are well situated to benefit.
By region, smartphone sales in the India upped 12.8% y-y in August, driving global growth. Smartphone sales in China still show a y-y downtrend, but the scale of this decrease is gradually lessening. The recent resurgence of Covid-19 effects bodes ill for sales, but given the arrival of shopping season, the chances of a drop in sales like that seen in 1H20 is limited.
By company, SEC achieved a y-y climb in smartphone sales for the first time since Oct 2019, helped by both improved demand in the Indian market and the impact of sanctions on Huawei. Moving ahead, SEC’s smartphone sales should continue to trend upwards, backed by new product launches. Apple’s smartphones continue to sell well, with sales rising about 35% y-y in August.
Market recovery (with Huawei being sole decliner) to spur SEC’s smartphone sales
Despite the impact of Covid-19, we favorably view the fact that global smartphone sales have shifted to a y-y rise. It is also very positive for domestic companies that sales at Huawei (SEC’s biggest competitor) have been on the decline due to the increased US sanctions.
We expect smartphone sales at Huawei to begin sliding in earnest from September on both components supply issues and a growing negative perception among consumers. We also believe that there is a high possibility of a sharp drop in Huawei’s smartphone sales in 2021. The largest overseas markets beneficiary of Huawai’s woes is to be SEC, while Oppo, Vivo, and Xiaomi all stand to benefit within China’s domestic market.
Amongst the expected beneficiaries, we recommend SEMCO, MCNEX, Partron, and Namuga.