Falling smartphone sales may affect memory chip prices in H2 2020

chinese smartphones

The smartphone market is consistently growing and the need for smartphones can not be overemphasized. Smartphones bring great convenience to consumers’ lives. The global smartphone sales have consistently exceeded 1 billion units for many consecutive years. This is the main source of revenue for many manufacturing giants like Apple and Huawei.

Smartphone sales 2020

However, smartphones are an aggregation of many components such as processors, display panels, memory chips, etc. Whatever happens to smartphones will directly affect these individual components. If there is a decline in smartphone sales, this will also reduce the revenue of many parts manufacturers.

According to media reports, the global smartphone sales seems to be unpredictable for now due to the coronavirus pandemic. If the global smartphone sales show an unseasonal trend and are disappointing in the second half of this year, the prices of DRAM storage and NAND flash memory will weaken. There will be a decline in their prices over the next two to three quarters.

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However, it is difficult to say if the global smartphone sales will disappoint this year. Manufacturing heavyweight like Apple, Huawei, Samsung, and other manufacturers will also launch top-notch new products in the second half of the year. Specifically, Apple will release a variety of 5G iPhones, these will be the first 5G iPhones in the market. The general expectation is that the iPhone 12 (Apple’s first 5G iPhone) will have good sales.

Nevertheless, this year, some research institutions predict that global smartphone shipments will decline by 15%. This means that the global smartphone shipment will drop to 1.15 billion units. This will significantly affect parts manufacturers such as memory chips.

Read Also:  Qualcomm: smartphone market will recover only in H2 2023

5G chips may cancel the effect of falling smartphone sales

However, with respect to memory chip shipment, the Strategy Analytics report claims that there has been an increase. The report says

“Despite the decline in smartphone shipments during the COVID-19 epidemic, the smartphone application processor market has shown significant growth in revenue driven by the increase in the average selling price of 5G application processors. Now, many of the 4G flagship application processor markets has shifted to 5G. However, 4G continues to perform well in the mid-range and low-end segments…”

As for Strategy Analytics, almost all major application processor vendors now have their focus on 5G processors. According to the company, 5G flagship processors will drive revenue growth in the second half of 2020.

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