In the fourth quarter of 2017, smart phone sales were not as good as expected by manufacturers. In December 2017, smart phone manufacturers actually entered the inventory adjustment phase. After the Chinese New Year holiday in 2018, smart phone manufacturers disclosed annual targets and re-increase inventory levels. In response to the soon-to-be-published semi-annual new machine models in 2018, there are also cases where the export of components was advanced due to tax considerations. As a result, smart phone APs resumed pulling goods momentum in March 2018.
Qualcomm has a high penetration rate of China's major smart phone manufacturers. With the gradual saturation of the domestic smart phone market, the growth of Qualcomm’s plans has been hindered. In addition, Qualcomm’s lack of financial space for product price manipulation, including commitments to the shareholders of US$1 billion. Measures to acquire NXP’s $44 billion, which would result in compensation for NXP’s $2 billion if the acquisition fails, and fines and Apple’s patent licensing fees for various countries. Under the pressure of maintaining gross profit, Qualcomm’s product price will be estimated. Operation space is limited.
Mediatek's P series product line entered the 12-nanometer stage. It achieved a phased task of reducing costs in design and manufacturing processes. The hardware-accelerated APU (AI Processing Unit) supported image processing and AI tasks and recaptured Oppo and millet orders. Market share increased further.
The 4G function machine implemented by Reliance of India was promoted by the way of buying mobile phone to deliver traffic with the telecommunication program. The sales status was higher than expected. The main beneficiaries were Qualcomm and Spreadtrum. This solution will further accelerate the shrinking of the 3G market and acceleration of LTE. Conversion, Focusing on shipments of IC phones for feature phones, 3G, 2G, is a focus.
In the first quarter of 2018, shipments of domestic smart phone APs increased by 17% year-on-year to 149 million units, which was affected by inventory adjustments.
In March 2018, the inventory adjustment of smart phone manufacturers was completed and new products were released one after another.
On April 1st, India increased the import tariffs on smart phones, and plans to gradually increase the impact of import tariffs on various components. Some manufacturers pulled their goods ahead of schedule, becoming one of the major growth momentums for smart phone APs in the Chinese market in the first quarter of 2018.
In the first quarter of 2017, the poor market conditions led to a lower base period and the manufacturers pulled goods in advance. In the first quarter of 2018, the growth of smart phone APs in the Chinese market was more pronounced.
In the second quarter of 2018, shipments of domestic smart phone APs were estimated to be about 174 million.
Compared to 2017 inventory decommissioning to the end of the second quarter, some manufacturers still have undigested inventory even in the third quarter of 2017, and the inventory control of all manufacturers in the first quarter of 2018 performed well, making the 2nd quarter of 2018 AP Demand showed a healthy recovery, which is expected to increase by 17% in the quarter.
Due to the demand of some APs in advance pulling into the first quarter of 2018, coupled with the deterioration of Sino-US trade relations, increasing the instability of the supply of components, it is estimated that the demand for APs in the Chinese market will decrease by 2.2% in the second quarter of 2018.