Tech Hardware Supply Chain - Gazhoo

Bhavin Shah
(852) 2800-8538
bhavin.a.shah@jpmorgan.com
Charles Guo AC
(852) 2800-8532
charles.x.guo@jpmorgan.com
Bhavin Shah
(852) 2800-8538
bhavin.a.shah@jpmorgan.com
Alvin Kwock
(852) 2800-8533
alvin.yl.kwock@jpmorgan.com
J.P. Morgan Securities (Asia Pacific)
Limited
Asia Pacific Equity Research
20 April 2009
Wireless Handsets
What’s new?
Industry unit shipments to decline in 2009E, market share to be reshuffled
We expect global handset shipments to decline by 15% in 2009 with developed and
emerging markets seeing a 24% and 11% decline, respectively. We expect all
geographies to experience a decline in 2009, even those such as Latin America,
EEMEA, and India, which saw strong growth in 2008. Among vendors, Nokia
should maintain its leadership position, but it could likely lose market share.
Samsung and LG should gain market share, and Sony-Ericsson and Motorola should
lose share, potentially becoming #4 and #5, respectively. Segment-wise, we believe
smartphones will continue to grow amid the aggressive push by operators in data
ARPU.
Further acceleration in component sourcing from non-Japanese suppliers
On the non-IC components side, Nokia continues to migrate its supply chain to
Taiwanese/China vendors to achieve better cost structure and logistical convenience.
On baseband, handset makers have been changing their sourcing strategy in recent
years to become more flexible and yet avoid excessive supplier power. Mediatek has
now penetrated Japanese vendors and is expanding its share within LG.
Smartphones become the front stage of competition
With the launch of 3G services, mobile Internet could be the new killer application
that could drive the uptake of smartphones. Also, the battle in the 3G smartphones
market is intensifying with the coming of Google phones based on the Android
platform, launch of 3G iPhones, new Windows Mobile 6.5, and a new offering from
Palm—the Palm Pre based on Web OS.
New technology adoption slowing down in down-cycle, except for touchscreens
Hardware components, industrial design, and form factor are no longer the center
stage for competition, and the more cautious investment also appears to be slowing
down technology innovation. Touchscreens remain the bright spot due to strong
growth in smartphones. We expect a strong take-off in capacitive-type touchscreens
versus the traditional resistive style. Haptic technology also continues to evolve and
find an increasing attach rate in the newer touch-based smartphones.
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