IHS Markit reported that shipments fell to 409 million units during the first three months of 2019, down from 512 million in the fourth quarter of 2018, seeing shipments decline year-over-year by 9 percent compared to the first quarter of 2018.
The market research firm anticipates that the second quarter will bring further decrease, 8% year-over-year in smartphone display shipments, followed by a 12 percent drop in the third quarter. While the smartphone business was already facing a number of headwinds in the first quarter, including market saturation and delayed replacement cycles, the drop in display shipments in the second and third quarters reflects mounting concerns about the impact of the trade dispute on global wireless demand.
“With its position at the forefront of the supply chain, the display business serves as an early indicator of smartphone market trends,” explains Hiroshi Hayase, senior director at IHS Markit. “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.”
Displays represent the most expensive component within smartphones and therefore are the first sector to experience order reductions when smartphone brands and manufacturers undergo a softening in demand.