The performance of the smartphone market in 2022 may not be very good. The decline in demand has caused shocks in the entire industry. Android manufacturers have been reported to have cut orders as high as 170 million units. However, the decline is not only affecting Android. According to reports, Apple has also lowered its iPhone shipment target. Presently, MediaTek and Qualcomm, the two major chip suppliers also facing a price war.
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A few days ago, a report that young users does not change their mobile phones for 4 years caused widespread heated discussion among netizens. The reasons why people are unwilling to change mobile phones are not only the high price. Another reason is the incessant lack of innovation from Android manufacturers. However, the lack of innovation is even more prominent on Apple’s side of the divide. One of such is evident in its use of a single design (the notch) for about five years.
Well-known analyst Ming-Chi Kuo claims that major Chinese Android manufacturers have cut orders for about 170 million units this year. This accounts for 20% of the original 2022 shipment plan. If consumer confidence continues to decline, orders may decrease again in the next few months. The chip shortage in the industry is getting worse. According to the inventory level of Skyworks and Qorvo, RF front-end chips delivery time now exceed 6-9 months.
Qualcomm and MediaTek refuse to cut their current prices
Such a large order cut will also affect the entire supply chain as well as upstream chip suppliers. According to reports, Android manufacturers have asked Qualcomm and MediaTek to cut prices in order to stimulate the mobile phone market demand. However, analysts at Morgan Stanley also pointed out that MediaTek and Qualcomm are currently reluctant to meet this request. This is because they believe that the processor price cut does not seem to stimulate the market.
As far as the current situation is concerned, it seems that there is no move by Android manufacturers. Thus, it is most likely that MediaTek and Qualcomm will not cut prices. In fact, if the situation gets worse, brands may have to start scrambling for chips. This will effectively make their prices go up. If the order cut is as serious as Kuo Ming-Chi claims, the price war is inevitable.
However, this may not entirely be the case. Millions of users still purchase Android smartphones and there should not be much pressure on the market.