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Smartphone Display Shipments Slow Amid US-China Trade Friction

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6/24/2019
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LONDON -- Global smartphone display shipments plunged by 20 percent sequentially during the first quarter and are poised to drop again in the second and third quarters, as the U.S.-China trade war worsens the wireless market’s woes, according to business information provider IHS Markit (Nasdaq: INFO).

Shipments fell to 409 million units during the first three months of 2019, down from 512 million in the fourth quarter of 2018, as reported by the IHS Markit Smartphone Display Intelligence Service. On a year-over-year basis, shipments declined by 9 percent compared to the first quarter of 2018. The second quarter is expected to bring an 8 percent year-over-year decrease in smartphone display shipments, followed by a 12 percent drop in the third quarter.

While the smartphone business was already facing a number of headwinds in the first quarter, including market saturation and delayed replacement cycles, the drop in display shipments in the second and third quarters reflects mounting concerns about the impact of the trade dispute on global wireless demand.

“With its position at the forefront of the supply chain, the display business serves as an early indicator of smartphone market trends,” said Hiroshi Hayase, senior director at IHS Markit. “Right now, that indicator is flashing warning signs as smartphone OEMs and ODMs reduce their display orders. Although other factors are negatively affecting smartphone demand, supply-chain participants now are expressing specific concerns about the repercussions of the trade war and the United States’ move to ban Huawei.”

Displays represent the most expensive component within smartphones. As a result, displays are the first sector to experience order reductions when smartphone brands and manufacturers undergo a softening in demand.

In May IHS Markit reduced its smartphone demand forecast by 1.7 percent due to the U.S.-China trade friction, particularly the Huawei ban. Huawei is a fast-growing player in the smartphone market, with the company in 2018 rising to take second place in the smartphone business, surpassing Apple. As a result, the ban is having an impact on the larger businesses of smartphones and their displays.

IHS Markit

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