TrendForce’s latest investigation finds that several factors have negatively affected smartphone production: first, the labor-intensive nature of the smartphone industry; second, China’s delay in work resumption until February 10 and population movement control; finally, the reduction in the public’s willingness to buy.
Due to the aforementioned factors, the research group is lowering its first quarter 2020 smartphone production forecast to a 12% decrease year-over-year, at 275 million units produced, which is a five-year low. TrendForce says that delayed work resumption and uncertainties in employees’ returns will cause the monthly delivery of key components to be postponed, thus affecting the progress of smartphone production.
Fortunately, first quarters have historically been weak seasons for smartphone production; also, manufacturers typically maintain a healthy inventory before the Chinese New Year. Therefore, per TrendForce, the outbreak isn’t expected to cause an immediate break in the supply chain, once work resumes at smartphone assembly vendors’ production bases.
The research group says that future developments will depend on the work resumption status of upstream supply chains and the import/export of goods through customs. In particular, the shortage of active/passive components and camera modules, which began even before Chinese New Year, will exacerbate the problem of smartphone component shortage because of their low inventory levels or labor-intensiveness.
Apple made arrangements for its employees to work from home in an effort to reduce risks of infection, but this has the side effect of slowing down the development of new iPhones in the first half of 2020, with component certification coming to a near halt. TrendForce says that, in the short term, Apple faces uncertainties in its labor force’s work resumption, and the supply of certain key components involved in the production of new iPhones can’t be properly delivered.
The research group says these setbacks will directly affect the upcoming release of iPhone SE2 (also known as iPhone 9). TrendForce is lowering its first quarter 2020 iPhone production estimates by about 10%, from 45.5 million to 41 million units.