Smartphone component manufacturer growth slows due to Chinese market saturation

    In the first quarter of 2015, iPhone sales increased by 40%, and with them the supplier companies. Murata, the Japanese manufacturer of ceramic capacitors, whose largest customer is Apple, increased operating profit over the same period by 116%. Taiwan-based camera component maker Largan boosted profits by 61%. LG Display, the manufacturer of screens for Apple phones, has increased profit by 8 times, Vedomosti writes .

    But the smartphone market is starting to slow down. In 2013, its growth was 39%, in 2014 - already 28%, and in 2015, according to the head of HSBC division Stephen Pelayo, it will not reach 10%.

    Saturation and slowdown of the Chinese component market is affecting Chinese smartphone manufacturers. Slows the growth of Xiaomi. Strategy Analytics warns that the rapid growth of this manufacturer is coming to an end.

    Taiwanese suppliers are also slowing growth. Taiwanese MediaTek, the largest supplier of smartphone processors to the Chinese market, in 2013 was twice as expensive as in 2011, but by 2015 the company's share price fell by a third. MediaTek, together with Qualcomm, are forced to fight with a new strong player - the Chinese Spreadtrum. Spreadtrum was founded in 2001 and produces processors for smartphones, tablets and modems.

    Nicholas Berath, Head of CLSA Technology Market Analysis, notes that Chinese brands prefer to have Chinese suppliers, that "the supply chain is surprisingly flexible with respect to specifications, redesign and payment terms." This view is supported by the words of Xiaomi Vice President Hugo Barra, a former Google Vice President.

    Barra says that the long sale and service life of each new device allows you to conclude profitable contracts, and the company's close proximity to manufacturing plants in China allows you to manage the cost structure. But the critical element is component supply chain management.

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