The ongoing U.S.-China trade dispute is poised to negatively impact an already troubled global smartphone display market in the second and third quarters, according to a new forecast from IHS Markit.
Smartphone display shipments plummeted 20% sequentially in the first quarter to 409 million units, down 9% year over year, IHS data shows.
IHS forecasts continued declines in global display shipments, which have already impacted by market saturation and delayed replacement cycles, with smartphone display shipments dropping 8% year over year in the second quarter and 12% in the third quarter, according to the company's Smartphone Display Intelligence Service.
IHS said the second and third quarter declines will reflect growing supply-chain concern over U.S.-China trade relations.
Last month, China’s Huawei and affiliates were added to the U.S. Department of Commerce’s Entity List, barring the tech giant from using U.S. technology without authorization. Today, The Wall Street Journal reported that the Trump administration is also considering a ban that would require any 5G equipment supplied for U.S. networks be designed and manufactured outside of China.
U.S. President Donald Trump and People’s Republic of China President Xi Jinping are slated to meet this week at the G20 Summit in Osaka to discuss the countries’ ongoing trade dispute.
“With its position at the forefront of the supply chain, the display business serves as an early indicator of smartphone market trends,” said Hiroshi Hayase, senior director at IHS Markit, in a statement. “Right now, that indicator is flashing warning signs as smartphone OEMs and ODMs reduce their display orders. Although, other factors are negatively affecting smartphone demand, supply-chain participants now are expressing specific concerns about the repercussions of the trade war and the United States’ move to ban Huawei.”
As the most expensive component of smartphones, displays are the first component to see a decline in orders when manufacturers experience softening demand, according to IHS Markit.
Huawei’s smartphone market position has grown, with the vendor overtaking Apple as the second biggest smartphone-maker globally in the first quarter of 2019, according to May findings from IDC’s WorldWide Quarterly Mobile Phone Tracker. Huawei shipped 59.1 million units in the first quarter, compared to Apple’s 36.4 million, IDC data shows.
Still, the company does not project Samsung to be affected by the U.S. Huawei ban, as the vendor is the primary smartphone active-matrix organic light-emitting diode display (AMOLED) supplier. IHS Markit projects the AMOLED market to continue to expand in 2019.