APPLE STOCK

Smartphone slump will continue into 2023, says Apple supplier


Maruta Manufacturing – which makes components for a wide range of companies, including Apple – says it expects the current smartphone slump to continue into 2023.

It predicts that consumers will hold onto their existing phones for even longer periods than they do now, although suggests that high-end phones may be the exception…

Background

The long-term trend in the smartphone market has been for upgrade cycles to lengthen as the technology plateaus, with more evolutionary improvements than revolutionary ones. In the US, for example, the average person now upgrades their phone every three to four years.

Over the past couple of years, the chip shortage has also hit production levels, meaning that the smartphone industry has been constrained by both supply and demand.

Most recently, rampant inflation is leading many people to reduce or eliminate spending on luxuries like new phones.

All these factors have led to a smartphone slump, with a report yesterday indicating that shipments have been down for the third consecutive quarter, the latest figure pointing to a 9% decline year-on-year.

The smartphone slump will continue, says Maruta

Maruta Manufacturing has firsthand experience of this slump. The Japanese company makes a range of components used by almost all smartphone companies, including Apple. Its share price has dropped 20% this year as demand for its products has dropped by double-digit numbers.

President Norio Nakajima told Bloomberg that he doesn’t expect much, if any, improvement next year.

“The momentum will not come back at least during fiscal 2022 and the situation is not that positive going into the next term,” Nakajima said. “Demand for consumer electronics has dropped drastically and these Chinese makers are not feeling well” […]

“Consumers might have been willing to buy new phones even with small upgrades if the economy were in a better shape,” Nakajima said, pointing to interest rate hikes by central banks around the world as a big factor. “What I’m afraid will happen is smartphones get further commoditized and people will wait even longer before upgrading.”

Nakajima did not discuss specific brands, but did indicate that Chinese companies were being hit hardest, and that high-end phones were faring best.

One silver lining seen by Murata’s president is sustained demand for high-end phones even during the economic downturn.

This is consistent with yesterday’s report, which saw Apple continuing to enjoy year-on-year growth in iPhone shipments, and significantly increasing the company’s market share.

Photo: Daniel Korpai/Unsplash

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Naveen Kumar

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