Morgan Stanley cuts ’15 smartphone outlook on weak demand
Morgan Stanley said that reduced demand from developed and emerging markets has triggered a cut in its global smartphone growth estimates for this year and next.
As a result, the U.S. brokerage is cutting its forecasts for 2015 smartphone shipments by 3.1 percent to 1.46 billion units and for 2016 by 6.3 percent to 1.61 billion units, it said in a research note dated Aug. 13.
The new estimates for smartphone shipments suggest a 10.4 percent year-on-year growth in 2016, compared with an increase of 28-76 percent over the past five years.
Morgan Stanley has also lowered China’s 2016 smartphone shipment projections by 1.4 percent to 433 million units, or up 2 percent year-on-year, following a previous estimated growth of only 1 percent for 2015.
“We expect the combination of high penetration in developed markets and China after the big refresh cycle, currency fluctuations that weakened purchasing power in emerging markets, and limited differentiation among Android lookalikes to shorten replacement demand,” said Jasmine Lu (
), a Taipei-based analyst with Morgan Stanley.
She said stagnant volume growth and intensifying competition have boded ill for the smartphone pricing trend, as the global smartphone average selling price was US$289 in the second quarter of 2015, relatively flat from the same period of a year ago.
Excluding Apple Inc.'s iPhones, the average selling price for Android-based smartphones was down 15 percent year- on- year in the April-June quarter, which could decline further in 2016 due to slower-than-expected upgrades in hardware specifications, Lu said.
As a result, Lu suggested that investors should avoid Androidbased handset OEMs, including TCL Communication, Lenovo Group Ltd. and Taiwan's HTC Corp. ( ), and component suppliers who are likely to suffer from greater margin pressure, such as Sunny Optical and Sunlord.