China market: Several smartphone components in short supply

A shortage in the supply of some key components, including high-end camera modules, touchscreen panels and multi-chip package (MCP) memory chips, is worsening in the smartphone industry supply chain in China, according to industry sources.

Branded and white-box smartphone makers in China have been building up inventories of related parts since the end of the first quarter of 2013 when MediaTek issued a warning to its solution clients indicating the looming of a possible shortage of smartphone components, the sources noted.

However, the pace of inventory build-ups have been unable to catch up with the growth in demand for smartphones in China and other emerging markets, said the sources, noting that overall shipments of smartphones by China-based makers for domestic and overseas sales have skyrocketed to 30 million units a month recently compared to 20 million units in the first quarter of 2013.

First-tier smartphone brands in China, including Lenovo, Huawei and Coolpad, have been agrressive in booking production capacity of small- to medium-size panels at Tianma Micro-electronics and Innolux, the sources revealed.

To cope with increasing demand, Tianma and Innolux both plan to hike the prices of their 4.5-inch qHD and FWVGA displays as well as 5-inch qHD displays starting the third quarter, indicated the sources.

Meanwhile, order visibility for LTPS panels at Japan Display (JDI) and Innolux has also been extended significantly, added the sources.

The supply of high-end camera modules has been tight since the beginning of 2013 due to strong demand from smartphones vendors including Apple, HTC, and others in Korea and Japan, said the sources.

Although Samsung Electronics, SK Hynix, SanDisk and Taiwan-based Elite Semiconductor Memory Technology (ESMT) have been ramping up their production of MCP modules, current supply of the memory modules can only meet 60-70% of the demand in China, revealed the sources.