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The entire global smartphone market will be impacted by the coronavirus outbreak in Q1

The entire global smartphone market will be impacted by the coronavirus outbreak in Q1
First, the Wuhan coronavirus outbreak was rumored to impact shipments of protective accessories for Samsung's highly anticipated Galaxy S20 handset family, which is mere hours away from an official announcement at the time of this writing. Then Apple closed its stores and offices in China "out of an abundance of caution." 

The same caution led LG and ZTE to cancel their big MWC 2020 events scheduled for later this month in Barcelona, and predictably enough, everyone from Amazon to Nvidia, Sony, TCL, Intel, and Vivo followed suit, deciding it was too risky to travel around the world at a time of great health uncertainty. 

Unsurprisingly, the first report of the larger coronavirus impact on the mobile industry came out just yesterday, and now TrendForce is ready to forecast how global smartphone production will be affected during the year's first three months. Because most major handset vendors either have factories in China or source key components from the world's most populous country, practically everyone's numbers are expected to decline in Q1 2020 compared to the January - March 2019 timeframe.

Samsung doesn't have as much to be worried about as Huawei

Overall, global smartphone production could take a year-on-year hit of around 12 percent, dropping to 275 million units. Honestly, that doesn't sound so bad to us, especially compared to the 50 percent decline in sales tipped for China alone.

There are multiple reasons why the industry is projected to hold up relatively well, starting with the fact that manufacturers typically maintain a "healthy inventory" before the Chinese New Year, which was celebrated on January 25. Secondly, Q1 is a "historically weak" season for smartphone production, making these problems a lot easier to swallow than if similar ones had appeared prior to the always busy holiday period.

But perhaps more importantly, not all smartphone vendors are impacted in the same way by the novel coronavirus epidemic. Samsung, for instance, has its main production base located in Vietnam, which means its Q1 numbers are only expected to dip by 3 percent compared to the previous TrendForce forecast, to a grand total of 71.5 million units. In contrast, Huawei's production prognosis for the January - March 2020 window now sits at 42.5 million units, down 15 percent from initial expectations.

Full-year smartphone production may not be greatly impacted

Oppo and Vivo are likely to be similarly affected, while Apple and Xiaomi's forecasts have been revised down by 10 percent. As already reported, the Cupertino-based tech giant will have trouble assembling as many iPhone 9 units as initially targeted due to the coronavirus outbreak largely coinciding with the start of the 4.7-incher's production. All in all, Apple should be able to manufacture 41 million iPhones during Q1 2020, down from an original prediction of 45.5 million units.

On the bright side, TrendForce does not have an "overly pessimistic outlook" towards overall 2020 smartphone production, expecting most demand to be "deferred rather than eliminated"... as long as the outbreak "can be controlled and a basic level of demand can be supported by the overall global economy."

In other words, most people that won't be able to buy a new smartphone this quarter will simply delay their purchase until production picks up. That makes sense, but then again, it remains unclear if the epidemic can in fact be controlled. Of course, if things get out of hand, tight iPhone 9 (or iPhone SE 2) supply and an unusually uneventful Mobile World Congress will be the least of our problems.


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