Credit Suisse predicts steep fall in global smartphone output as demand and China economy slow

Global smartphone production in the first quarter of this year is expected to drop 19 per cent as major handset makers feel the effects of softer demand and weak consumer sentiment in China, according to a technology research report from Credit Suisse.

Production volumes are expected to slow at Apple, Samsung Electronics and Chinese smartphone makers and “the bottom is not yet in sight", according to Credit Suisse analysts, who revised down a previous forecast for a drop of 14 per cent to 19 per cent.

Output of Apple’s iPhones is expected to drop 40 per cent sequentially for the January to March quarter, while component makers are forecast to see a fall in demand of at least 50 per cent over the same period, according to the report.

The weak forecast for the global smartphone market comes after a series of disappointing revenue outlooks from some of the world’s biggest handset makers. Apple and Samsung both posted weak earnings reports in recent months, blaming weaker demand in China where the economy is slowing amid a trade standoff with the US.

However, Chinese smartphone brands such as Huawei Technologies, Xiaomi Corp and OnePlus have also been gaining share at the expense of Apple and Samsung, with higher specification models and lower prices.

Huawei said in December it was on track to ship 200 million smartphone units in 2018 thanks to rapid growth in the past three quarters. Huawei surpassed Apple in both the second and third quarter of 2018 to become the world’s second-largest smartphone vendor behind Samsung and its smartphone division is now approaching the revenue contribution seen from its core telecoms equipment business.