How a greater demand than supply may cause smartphone component shortages in 2017.

Smartphone vendors likely to brace for component shortages in 2017
Max Wang, Taipei; Steve Shen, DIGITIMES [Monday 16 January 2017]

The risk for the global handset industry to brace for a shortage in supplies of some key components, including displays, memory products and optical sensing devices, in 2017 is rising due to strong demand from China-based smartphone vendors, according to sources from Taiwan’s handset supply chains.

The rise of China-based brands, notably Oppo and Vivo, in the global smartphone space, as well as efforts by China-based vendors to enhance their presence in the mid-range to high-end segment and to ramp up their overall shipments, have combined to scale up demand for handset components, said the sources.

While Samsung Electronics and Apple are expected to rank as the top-2 smartphone vendors globally in 2017, China-based Huawei, Oppo and Vivo will contest for the third to fifth positions. Huawei may ramp up its shipments to over 150 million units in 2017 compared to 139 million shipped in 2016, while Vivo may ship over 100 million in 2017, indicated the sources.

Taking cue from Oppo and Vivo, most smartphone vendors in China have been moving to focus on mid-range and high-end models with high price/performance ratios in order to raise the product ASPs, the sources noted.

Inspired by market rumors indicating that Apple will adopt OLED panels for its next generation iPhone devices in 2017, China-based smartphone vendors, and others alike, have rushed to secure production capacity for small- and mid-size OLED panels, a move which will definitely cause a shortage in OLED panel supplies in 2017, commented the sources.

Meanwhile, the supply of small- and mid-size TFT LCD panels will remain tight in 2017 as the display size of mainstream smartphone models has shifted from the previous 5-inch to 5.5/5.7-inch, added the sources.

Demand for high-end camera modules and other optical sensing devices will also expand significantly in 2017, said the sources, noting that Samsung has begun to adopt 16-megapixel cameras for its mid-range A-series models.

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