Worldwide smartphone shipments are estimated to reach 210 million units in the first quarter of 2013, up 9.4% from the number in the fourth quarter of 2012, according to DRAMeXchange.
Samsung Electronics, whose smartphones showed strong sales performance in the first quarter of 2013 and ranked first in the China market, is expected to have shipped almost 65 million handsets by the end of the first quarter. Already, the growth in demand for Samsung's smartphones is causing supplies of eMCP/CI-MCP to tighten. Given the large number of China's branded smartphones that are known to rely on MediaTek's eMCP reference chips, the constraints to eMCP supply are expected to have a negative impact on various Chinese manufacturers' shipments.
With Samsung appearing to have little trouble maintaining its global image, much of the company's focus has been directed towards advancing its vertically integrated component designs and manufacturing processes. The key high-end smartphone parts that are currently known to be produced by the Korean company include core processors, AMOLED panels, LPDDR, and NAND flash. These components are used not only in Samsung's own smartphone devices, but also those produced by other companies as well. In the event that Samsung eventually achieves record shipments, it is not inconceivable that the company would begin excluding other manufacturers from accessing its component parts. A few noticeable signs of this can already be spotted within the memory card industry.
As Samsung accounts for approximately 60% of the overall eMCP/CI-MCP shipments, its decision to tighten eMCP/CI-MCP supply is likely to have major repercussions for companies like MediaTek, which is known to provide chips to China's smartphone makers. As indicated by DRAMeXchange, MediaTek's strong reputation in China, along with its chips' ideal price and design, is one of the reasons why Chinese branded manufacturers have been keen to develop smartphone products that are based on the Taiwan-based company's chip designs, in particular those that incorporate eMCP/CI-MCP chips.
Mainstream products like eMCP/CI-MCP 4+4 and 4+8 are common in the mid-to-low end market, while the more advanced eMCP/CI-MCP16+8 is known to be more popular within the high-end segment. Should Samsung continue to lower and restrict its chip supply, it is predicted that during April, only first-tier Chinese brands like Huawei, ZTE, Coolpad, and Lenovo would have access to the Korean company's eMCP/CI-MCPmemory products. These smartphone manufacturers currently account for approximately 70% or less of total demand.
For the 2- and 3-tier manufacturers, the supply restrictions are expected to be even more rigid. The tightened supply of eMCP/CI-MCP 4+4 and 4+8 chips are likely to have a direct impact on shipments of mid-to-low end China-made smartphones during the second quarter.
According to DRAMeXchange, if manufacturers like Samsung and SK Hynix do not successfully resolve the eMCP/CI-MCP shortage issue during April, and if other memory manufacturers are unable to fill in the gap, the eMCP/CI-MCP inventory of smartphone makers are in danger of dropping below safety levels. This is likely to create a domino effect affecting not only shipment progresses for smartphone components like core chips and panels, but also revenue performances of relevant component manufacturers. For the Chinese branded manufacturers, the impact is expected to be particularly noticeable.
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