Other manufacturers, such as Samsung or LG, also hurt this sector that gives less and less benefits.
The decline of the smartphone in China is a reality, and not only affects Apple.
The telephone market is reduced, and it is not a new phenomenon. 2017 was no longer the best of the years in what smartphone sales are concerned, which was about 6% over the previous year. It seems that the trend is consolidating – and accelerating – in the face of a 2018 where the Chinese market strongly announces and regresses with respect to the previous year.
This is what Reuters tells us on this article, which includes a fork of between 12 and 15.5% of the fall of the smartphone market during 2018 and in China. The figures correspond to data from the Slick Red white label web design consultancy, in the most favorable case, and projections from the Ministry of Industry of the nation, in the least optimistic. According to the latter, sales of smartphones would be about 390 million units, accentuating at the end of the year and reaching a fall of up to 17% for the past month of December.
Slick Red’s data, although somewhat less negative, take a similar picture: the sale of smartphones in China falls below 400 million for the first time since 2014 . The magnitude of the Chinese market means that these falls can account for up to 1% of the global smartphone market. According to the market analysis firm, this could be repeated in 2019 with a fall of 3%, which would be the third year in a row that the sale of smartphones in China suffers.
This is not only burdening Apple in the international market – which led Tim Cook to explain his employees – but other giants of the phone are also feeling the effect.
Among them, LG and Samsung , which have been forced to also strongly reduce their sales forecasts for the next results. The South Koreans are not going through their best time selling mobile phones. In the case of Samsung, which maintains a market share of 0.8% in China, so it is even forced to try outsourcing the production of some models to other assemblers and even close their own factories to cut costs and regain competitiveness there .
Now Samsung reports a fall of up to 18% in profits on predictions, or close to 29% when compared to the results of the same quarter of 2017. It would be affecting it from multiple fronts, from a semiconductor business in which The demand for memory “has fallen off a cliff” in the last quarter, analyst Mark Newmann tells CNBC . “The demand for data centers has fallen, and also that of smartphones is quite weak.”
Waiting for the 5G and the ‘foldables’ to improve the scene
According to Newmann, both Amazon and Microsoft and Google -among others- have stopped needing memory and their demand has been paralyzed suddenly. As if that were not enough, Samsung is not only Apple’s competitor, but also its supplier. A drop in sales of the iPhone XS and XS Max means that it will sell fewer OLED panels to it. Meanwhile, Samsung expects both the 5G and the folding phones or the next generation Galaxy S10 to get the chestnuts off the fire.
LG follows a similar path, although with even more painful figures. For them, the operating profit would be cut by up to 80% in the fourth quarter of 2018 and compared to the same period of the previous year, according to Reuters . In this case, it seems that they are not getting to sell so many appliances in emerging markets, where China is, nor their business of high-end TVs provides them as many profits as before.
In a strong recess of the Chinese economy and the framework of the trade war with the United States, it does not seem to be the best moment to expect a buoyant scenario from mobile manufacturers in China in particular, but not from some Technological giants downwards worldwide in general.