Mobile phones sold well in the first quarter, the supply chain increased orders, and some devices rose in price

Interface News

2024-05-31 09:04Posted on the official account of Beijing Jiemian News

Interface News Reporter|Ge Zhenwei Lu Keyan

Interface News Editor|Lin Teng

With the blessing of AI, the consumer electronics industry, represented by smartphones, is recovering.

According to a report released by IDC, international data company, in the first quarter of 2024, global smartphone shipments increased by 7.8% year-on-year to 289 million units, and global smartphone shipments have increased for the third consecutive quarter.

The recovery trend on the supply chain side is also obvious. For example, Lens Technology, a manufacturer of mobile phone glass, achieved operating income of 15.498 billion yuan in the first quarter, a year-on-year increase of 57.52%, a new high in the same period of the previous year; the net profit attributable to the parent company was 309 million yuan, a year-on-year increase of 379.02%; Xinwangda, which supplies batteries for a number of mobile phone manufacturers, also reported a high performance in the first quarter, with a net profit attributable to shareholders of listed companies of 319 million yuan, a year-on-year turnaround.

A relevant person from Lens Technology told Jiemian News that in the first quarter of 2024, due to the strong demand for mid-to-high-end new products from domestic and foreign consumer electronics and new energy vehicle customers, Lens Technology will still work overtime on holidays.

According to the relevant person in charge of Sunwoda, since the beginning of this year, the target guidance of most customer orders has increased, and the company's orders in the first half of the year are sufficient.

With the gradual recovery of the consumer electronics industry, the voice of supply chain price increases has also risen.

The price of storage products has increased significantly

There are many factors involved in product price increases, and specific to each product in the supply chain, the price increase situation is different.

A number of supply chain sources told Jiemian News that the most obvious price increase in this round of consumer electronics supply chain is storage products. According to TrendForce data, the increase in DRAM contract price in the second quarter of 2024 has been revised upwards to 13~18%; NAND Flash is about 15~20%. DRAM and NAND Flash are the main memory devices of smartphones.

BIWIN Storage, a storage manufacturer, said that in 2024, with the recovery of terminal demand, the strategy of upstream production reduction and price increase will continue, and the inventory of end customers will continue to improve, gradually moving towards the recovery of supply and demand balance. Memory prices continued to grow in the first quarter of this year, and the willingness to continue to increase prices in the second quarter was strong, and the industry trends in the third and fourth quarters remained to be seen.

"The price of the company's products is mainly determined by various factors such as supply and demand, market competition and so on. At present, the relationship between supply and demand in the market is gradually improving, and the price of the company's products is on the market. BIWIN Storage said.

An important background of this round of storage product price increases is that with the explosive development of AI technology, large models at home and abroad are emerging, and higher requirements for computing power and data have given rise to massive storage demand. Storage giants such as Samsung Electronics and SK hynix have shifted more production capacity to the AI server business, while the demand for smartphones has not yet been fully met.

In addition to factors such as supply and demand, the rising cost of raw materials is also one of the factors that directly lead to this round of supply chain price increases. Copper is the main raw material.

A domestic consumer electronics supply chain company told Jiemian News: "The price of some of the company's electronic components has increased, with a range of 5%-10%, mainly due to the increase in the price of raw materials, such as the price of copper, which has led to the increase in the price of copper powder for MLCC (chip capacitor) electrodes, and the price increase is expected to last for at least 1-2 quarters." "Among them, MLCCs are one of the most used passive components in the electronics industry.

Copper is one of the most widely used raw materials in the upstream supply chain of consumer electronics, and the price of copper has continued to rise to the highest level ever since the beginning of this year.

On May 20, Kingboard Laminate, a leading company of copper clad laminates, issued a price increase letter, saying that due to the sharp rise in the price of copper, the main raw material of copper clad laminates, and the recent stock of customers, the company's production capacity in May has been fully connected, and it is forced by cost pressure, so from the new order on the same day, the price of related sheets will be increased by 5 yuan/sheet-10 yuan/sheet. Prior to this, Kingboard Laminate had already issued a round of increase letters in March.

Copper clad laminates are the upstream material of PCBs (printed circuit boards), which are widely used in consumer electronics. According to the conduction effect from upstream materials to downstream, PCB and other downstream products are "rising".

Bank of China Securities pointed out that the global overall macro improvement and repair has led to the establishment of a continuous upward trend in copper prices, and the radiation effect of copper prices will further promote the relatively high concentration of copper clad laminate field to the downstream, and at the same time, the full recovery of PCB demand driven by AI also provides a hotbed for price increase.

However, fluctuations in copper prices have no impact on supply chain companies that do not need to use copper as a raw material.

The relevant person in charge of a domestic optical company told Jiemian News: "The rise in copper prices has no impact on us, because we make cameras, and we can't use these raw materials that have risen in price." The company's current purchase price has not changed, and the shipment volume is arranged according to the customer's order. Of course, the recovery in demand for smartphones will lead to an increase in the company's product shipments. ”

In addition, a domestic electronic component supplier said: "The company's products have not increased in price for the time being, and the prices of some categories are relatively stable, and there is no price reduction (components generally have to be reduced annually, that is, the same part number, and the bidding price this year will be reduced compared with last year). ”

How do mobile phone manufacturers respond?

In addition to storage products, the core processors of smartphones are also facing price increases. Previously, foreign media reported that the price of the flagship SOC Snapdragon 8Gen3 of the American chip giant Qualcomm will rise from $160 to $200. According to other news, the price of Snapdragon 8 Gen4 may increase by 500 yuan.

The main reason for the rise in Qualcomm chips is the introduction of TSMC's 3nm advanced process node, due to the increase in the number of EUV lithography tools, the production cost per wafer and each chip has also been pushed up accordingly.

The pressure of price increases has been transmitted to terminal manufacturers. Taking the recently released new machine as an example, the Honor 200 series and OPPO Reno 12 series are 200 yuan higher than the previous generation price under the same memory configuration.

Zhao Ming, CEO of Honor, said in an interview with Jiemian News that the shortage of parts and components is one of the main reasons for the price increase. At present, the global supply of various raw materials and electronic devices is relatively tight. With the advent of the era of AI applications and computing power, the supply of many devices may enter a relatively tight state in the future.

In the face of price increase pressure in the upstream supply chain, mobile phone manufacturers have two basic ways to respond: price increases and allocation reductions.

Taking the recently released new machine as an example, the Honor 200 series and OPPO Reno 12 series are 200 yuan higher than the previous generation price under the same memory configuration.

Earlier this month, the Meizu 20 Classic mobile phone was revealed to have downgraded the official promotion of "UFS 4.0 flash memory as standard in all series" to UFS 3.1. Meizu explained that this was caused by the adjustment of the production process. However, according to Jiemian News, one of the main reasons behind it is the rise in the price of flash memory.

Zhu Jiatao, a senior analyst at Canalys, said in an interview with Jiemian News that the most serious price segment of the allocation reduction will be 2,000-3,000 yuan. This is the basic market of China's smartphone market, and the competition is also the most fierce. Last year, due to the sharp drop in memory prices, in order to compete for the market, major manufacturers have used large memory solutions in this price segment. However, the profit in this price segment is already meager compared to high-end flagship models, and after the memory price rises this year, it will be difficult for manufacturers to bear the cost pressure behind it.

Zhu Jiatao said that in contrast, the high-end flagship machine has a relatively considerable profit margin and is more flexible in terms of cost adjustment in marketing and channels, and the impact of this round of price increases on it is weak.

Xu Qi, global vice president of realme, mentioned in a previous interview that the impact of supply chain price increases this year has indeed exceeded expectations, and realme will reduce other costs by increasing the scale and volume, or reduce costs through technology research and development, but will not reduce product performance due to supply chain price increases.

The price increase of overseas suppliers has also prompted domestic mobile phone manufacturers to speed up the search for domestic alternatives. For example, in 2023, OnePlus will cooperate with BOE to jointly launch the "Oriental Screen", which will be applied to the OnePlus digital series and Ace series. The two manufacturers have gone through two years of joint pre-research and invested hundreds of millions of R&D funds.

This is a way for mobile phone manufacturers to seek innovation under homogeneous competition, and it can also dilute costs and form a risk-sharing mechanism in joint research and development, which can not only provide more supply security, but also resist the pressure of rising prices of upstream components to a certain extent.

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