Here's why tablet sales are soaring in China

Here's why tablet sales are soaring in China
The coronavirus continues to spread, and as we told you earlier today, the virus forced Samsung to temporarily close one of its factories in South Korea until Monday. The virus has had an effect on the mobile industry and with the number of cases in South Korea starting to rise, demand in that country for devices and production of these devices is sure to be negatively impacted. Still, China remains the epicenter of the coronavirus disease; inside China, there is one mobile device that is actually benefiting from the illness and that is the tablet.

Apple is considered the category creator of the modern tablet which swith the 2010 release of the iPad. The demand for these devices has been declining over the last few years although Apple reported surprising growth in iPad revenue during the third and fourth fiscal quarters of 2019. During the holiday shopping season, which was the company's fiscal first quarter of 2020, iPad revenue declined 11.2% to $5.98 billion. Consumers quickly understood that tablets don't need to be updated every two years, and as smartphones continue to sport larger displays, many found that they didn't need a tablet after all. According to Digitimes Research, first quarter 2020 tablet shipments will decline 20% year-over-year to 28.56 million units.

Tablet manufacturers in China are using only 50% of their capacity

According to Digitimes, the spread of the coronavirus in China has forced many office workers in the country to work from home. As a result, the demand for tablets in the country has exploded. Additionally, many schools are turning to tablets to help teach students who are forced home due to the rapidly spreading virus. Since the streets in many parts of China now look like ghost towns, those purchasing tablets are doing so through online platforms where a 32GB 10.2-inch Apple iPad sells for the U.S. dollar equivalent of $355.50. The 128GB variant of the same device is priced at the equivalent of $440.87 USD. These prices are as much as $28 more than what Apple is asking for the same iPad models online.

Economics 101 says that demand is only half the story when discussing the market for a product with supply making up the other half. While demand for tablets is taking off in China, supplies are down because the coronavirus has forced suppliers to deliver fewer components leading manufacturers to cut production. Currently, most Chinese factories producing tablets are running at only 50% of capacity at best. The situation with suppliers means that a quick bump up in tablet production doesn't seem possible under current conditions. As an example, Digitimes points out that the companies rolling Huawei's tablets off of their assembly line, Wingtech, Longcheer, and Huaqin, are running at only 50% to 60% of capacity.

Apple's iPad factories are humming at only 30% of capacity. Entry-level iOS tablets are manufactured in Taiwan by Compal Electronics and higher-end units (like the iPad Pro, iPad Air, and iPad mini) are assembled by Foxconn at its factory in Chengdu.

Speaking of the iPad Pro, Apple's premium tablet is expected to be refreshed with possibly two new models (11-inch and 12.9-inch variants) that could be introduced on March 31st. The new iPad Pro is expected to include an upgraded camera module that resembles the one Apple is using on the iPhone 11 Pro units. This will include a 12MP Wide camera, a 12MP telescopic camera, and a 12MP Ultra-wide camera. There also could be a Time of Flight (ToF) sensor on the back. This sensor tracks the time it takes for an infrared beam to bounce off a subject and return to the device. With this information, the tablet can deliver enhanced AR capabilities, and produce secure 3D maps. We expect the A13X chipset to power the tablets which should be equipped with 4GB of memory and 64GB to as much as 1TB of storage.

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