Technology research firm Omdia lowered by 20% its forecast for global shipments of 5G smartphones. The latest estimate reflects the disruption to component manufacturing caused by the Chinese government's efforts to contain COVID-19, the disease caused by a new strain of the coronavirus.
Production delays for smartphone screens and, to a lesser extent, 5G antenna modules, will likely push back the availability of some new phones to the first quarter of 2021, Omdia reported. As a result, the research firm revised its forecast for 5G phone shipments in 2020 from 250 million to 200 million.
COVID-19 has spread to at least 86 countries since government health officials first identified the potentially deadly coronavirus strain in Wuhan, China, in late December. At its peak in China, the virus was infecting more than 3,000 people a day.
China's aggressive tactics for containment has reduced the number of daily infections to 200. However, shutting down factories, imposing strict quarantines, and isolating areas of the disease has halted the production of active-matrix OLED (AMOLED) smartphone displays. A significant portion of display assembly takes place in the Wuhan area.
Display production dropped by 40% to 50% in the first quarter and will likely be down in the second quarter, Omdia senior analyst Kevin Anderson said. "And, it remains to be seen how quickly they can ramp back up going into Q3, which is a major production quarter."
Impact on 5G antenna production
Slowing the spread of COVID-19 has also led to lower inventories of 5G antennas. However, the production drop in China was offset somewhat by manufacturers in Taiwan, where factories remained open, according to Omdia.
The component shortages could delay new 5G models from Chinese smartphone makers Huawei, Oppo and Xiaomi, Anderson said.
"They were rolling out 5G quite aggressively," he said. "They have quite aggressive plans for the year."
Samsung, which has the largest share of the global smartphone market, was not affected by the problems in China because most of the production of its phones is in Vietnam.
Whether manufacturing slowdowns in China will affect Apple remains to be seen, Anderson said. Analysts expect the company to release a 5G iPhone this year, but Apple has not made an official announcement. Apple makes most of its iPhones in China.
Typically, smartphone manufacturers introduce models late in the third quarter, which drives the highest sales of the year in the fourth quarter. If they delay the unveiling of new phones, the sales cycle will likely extend into the first quarter of 2021.
Omdia, a unit of Informa Tech, is the latest market research firm to revise 5G smartphone predictions because of COVID-19. In late February, Strategy Analytics lowered its 2020 forecast to 199 million phones.