The rapid spread of the novel coronavirus (COVID-19) has affected the global economy and disrupted businesses including smartphone makers.
The majority of smartphone OEMs rely on parts that are manufactured in China and South Korea. Some of the assembly plants are also located in these two countries. Both of which are struck hard by the pandemic.
Wuhan, the capital of Hubei, China, houses a lot of industries besides electronics.
Moreover, the city of Daegu in South Korea is merely 20 minutes away from its industrial park. A huge chunk of the factories near the city produces smartphone components and electronic devices.
According to Razat Gaurav, chief executive of Llamasoft, “approximately 70% of smartphones are manufactured in China – so as the pandemic hits China, there has been significant disruption to the supply of existing devices.”
Demand for smartphones going down
Research firm IDC stated that the demand for smartphones is also going down. The pandemic has brought an economic meltdown and people are prioritizing essential goods over mobile devices.
IDC assessed that the global shipment of smartphones from China had a huge 40% drop compared to the same period last year. The research said it expects consumers to most likely to purchase 33 million fewer phones this year.
Europe and the U.S. are also expected to take a hit on smartphone sales, added Gaurav.
Aside from the economic hit that the majority of the countries suffered, the steep price of flagship devices may also affect smartphone sales. One reason for the high price is Qualcomm’s expensive Snapdragon 865 flagship SOC.
Delays expected on shipments of next-gen smartphones
The COVID-19 has prompted companies around the world to implement work-from-home arrangements. The different processes in the manufacture of smartphones are also expected to be affected.
“Much of the design work does not require significant social contact, meaning you don’t have to be in physical proximity to people,” said Frank Gillet, an analyst from the Forrester research firm.
For instance, the software department might be able to work remotely and develop the operating system. However, the smartphone assembly line needs to work continuously. Testing of the units also takes physical presence to ensure that a device works smoothly.
“Testing may be hard as the industry is very tight on security and they would probably struggle with the concept of people taking home prototypes of the phone to test – as these are usually shrouded in secret,” Emile Naus, partner at Bearing Point consultancy said.
Shipments may also be adversely affected due to the lockdown implemented in China. Manufacturing plants that source materials from other places are expected to encounter delays.
As of the moment, the smartphone industry is on the brink of experiencing a series of delays. This will be most evident in companies like Apple and Samsung that launch products in the same season every year. There might be price changes that will happen next year as well to entice users to continue purchasing products.