New wave of COVID-19 in Southeast Asia forces TrendForce to downgrade smartphone shipments forecast for the year

In April and May, the incidence of COVID-19 in India and Vietnam went up. Analysts at TrendForce believe that the new wave of the pandemic, which forced the Vietnamese government to introduce quarantines and travel restrictions to high-risk regions, will affect the global smartphone market. The problem is that Samsung mainly manufactures its smartphones in Vietnam, so the epidemiological situation in this country does not directly affect production volumes. A similar picture is taking place in India, where Samsung businesses have fallen victim to the outbreak of COVID-19. As a result, the production of Samsung smartphones in the second quarter fell sharply compared to the first. The reduction was 23.5%. In just the quarter, the South Korean manufacturer shipped 58.5 million devices.

Analysts clarify that the matter is not so much in the direct impact of restrictive measures on the work of Samsung enterprises, as in the disruption of the supply chains of components and materials to these enterprises. As a result, the utilization rate of Samsung’s production facilities in Vietnam fell to about 60%.

For the reasons described, other manufacturers, whose production facilities are located in Vietnam and India, also suffer, in particular, Foxconn.

Considering the decrease in shipments in the second quarter, and predicting that negative factors will continue to operate in the second half of the year, TrendForce specialists have lowered their forecast for the release of smartphones in 2021 in general from 1.36 to 1.35 billion units. Moreover, analysts do not rule out that global smartphone production may decline even further in the current quarter, as the pandemic in Southeast Asia continues. As a result, the demand for smartphones in countries of the region such as Indonesia, Malaysia and Thailand may also decrease.