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Samsung Q2 Down 24%

TrendForce Cuts Smartphone Forecast by 5M on Asia COVID-19 Surge

TrendForce scaled back its annual smartphone production forecast for 2021 by 5 million units to 1.35 billion, citing the “intensifying COVID-19 pandemic in India and Vietnam in April and May.” Samsung, with manufacturing in Vietnam and India, had a 23.5% production decline sequentially in Q2 to 58.5 million units, the report said.

Global smartphone production could fall further in the second half “since the pandemic is showing no signs of an impending slowdown in Southeast Asia,” TrendForce said. The second wave of coronavirus could “hinder demand from the region,” it said. May outbreaks forced the Vietnamese government to impose lockdowns and travel restrictions in high-risk areas, but the number of confirmed COVID-19 cases has continued to rise, said the report.

TrendForce said Samsung has been gradually relocating its smartphone production to Vietnam since 2009; its device production facilities and supply chain are concentrated in the northeastern Vietnamese provinces of Bac Ninh and Bac Giang. Due to the rapid spread of COVID-19, local authorities in the two provinces imposed various disease containment measures in May and June. The measures haven't affected the internal operation of Samsung’s local production facilities, but they disrupted the supply of components and materials -- ICs, mechanical parts and packaging materials -- to the facilities, said the report. As a result, the capacity utilization rates of Samsung’s smartphone production lines in Vietnam fell to around 60% at one point, it said. Samsung didn’t comment Wednesday.

Samsung teased its next U.S. smartphone Tuesday, announcing its virtual Unpacked event for second-half product announcements. “Join Samsung this August 11 for a Galaxy Unpacked event to unfold the next chapter in mobile innovations,” it said, teasing its next foldable device.

Foxconn also has a production base in Bac Giang for handheld devices, including Nokia feature phones and unbranded, white-box phones, TrendForce noted. The facility has 60% of Foxconn’s production capacity for feature phones, with the rest located mostly in India.

Though rising COVID-19 cases hindered Foxconn’s manufacturing operations in Vietnam “somewhat,” the “lackluster” production volume of feature phones this year should be attributed to the foundry capacity shortage and weakening global demand for feature phones, said the report. The pandemic is likely to have less of an impact on the production of white-box phones, since these handsets are still in the early phase of production, with relatively low volumes.