Although the global smartphone market is becoming increasingly saturated, it is still worth looking forward to demand in emerging markets such as Southeast Asia and Africa when caught in an environment with limited momentum. . Due to the recent expansion of infrastructure construction in Africa, the regional smartphone market has the opportunity to replicate the prior development path of Thailand, Vietnam, and Indonesia. TrendForce forecasts total smartphone shipments in Africa to reach approximately 107 million units in 2022. Sub-Saharan Africa, which accounts for 78% of Africa’s total population, holds the greatest potential and countries such as Nigeria, Ghana, Senegal, and Tanzania are worthy of attention.
Taking the Sahara Desert as a natural barrier, North Africa cleaves closer to Europe and the Middle East, modernizing earlier, and possessing higher GDP per capita and relatively greater spending power. Looking at Egypt, its mainstream smartphone brands in 2021 were Samsung, OPPO, and Xiaomi. As for Africa south of the Sahara, taking Nigeria as an example, mainstream brands are TECNO, Infinix, and Itel, which is very different from the Egyptian market. TECNO, Infinix, and Itel are owned by Transsion Holdings of China and, in terms of the overall African smartphone market, Transsion Holdings is already dominant. These three brands captured an estimated combined market share of approximately 52% in 2021, eclipsing Samsung’s 15%.
TrendForce believes that mainstream mobile phone brands in Africa are very different from markets in Europe, North America, and East Asia and are mainly influenced by factors such as local spending power, communication services, and user needs, while mobile phone pricing is undoubtedly the decisive factor. For example, approximately 60% of smartphones sold in Egypt are priced between $100 and $200. While in sub-Saharan Africa, excluding a few countries with high GDP per capita such as Gabon and South Africa, most smartphones are sold at below US$100 in the market. However, from the perspective of mainstream global smartphone brands, the price of low-end smartphones is still higher than US$160 which remains quite unaffordable for the majority of local consumers. This pricing gap gives TECNO, Infinix, and Itel more room to operate.
In addition, the reason Transsion Holdings’ brands can dominate the African smartphone market includes many localized marketing strategies in addition to price factors. For example, cleaving close to local consumption habits, setting up physical sales locations, launching models that support 4 sim cards to meet the needs of users with multiple phone numbers, or installing large-capacity batteries in low-end mobile phones to reduce the inconvenience of frequent searches for charging stations, all of which help to enhance the competitive strength of the Transsion brand. Transsion Holdings is expected to continue leading the African market from 2022 to 2025.
TV shipment performance in 2022 will return to a pre-pandemic cycle but the Russian-Ukrainian war has indirectly led to rising inflation. With consumer spending unchanged, expenditures on non-essentials are bound to feel the squeeze. Russia accounts for 82% of TV shipments in the CIS (Commonwealth of Independent States) region and Ukraine also maintains a 12% market share. As the war drags on, the region will bleed 1.5 to 2 million TV sets in the short term, and TV shipments may fall by more than 3 million sets in the medium term. Although demand in the CIS region is not positive, Southeast Asia and emerging markets were severely affected by the COVID-19 pandemic in 2021, deferring a portion of demand. Overall, TV shipments in 2022 will adjust downward to 215 million units, or 2.4% YoY and a decrease of 0.7% from the previous 2022 forecast.
According to TrendForce statistics, TV shipments in the CIS region account for 4% of the global total, of which 60% consists of 32-inch and 43-inch models. The two major TV brands, Samsung and LG, account for nearly 50% of the combined market in the CIS region. At present, due to factors such as geopolitics and economic sanctions, shipments to Russian factories for back-end TV assembly have been halted and Samsung has gone one step further by halting sales.
Samsung and LGE account for more than 50% of CIS region market share, hardest hit by the Russian-Ukrainian war
Russian demand for TV sets falls at 6-7 million units per year. Due to high tariffs, TV giants Samsung and LGE have been encouraged to set up TV assembly plants in Russia which, not only reduce tariff costs, but also enjoy the benefits of zero-tariff exports to Ukraine.
Samsung and LGE originally sent imports from South Korea to Russia in the form of CKD (Complete knock down) in order to assemble TV sets in local factories and enjoy duty-free benefits. However, the war has suspended all shipments to Russia.
It is worth mentioning, as damage has been dealt to the two Korean brands, Chinese brand Haier has chosen to accelerate its deployment in the Russian market. Haier is expected to successfully occupy third place in TV sales in the CIS region with a market share of 11% in 2022. In 2021 Haier’s shipments in the CIS region reached 800,000 units. In 2022, it has an opportunity to cannibalize lost market share from Korean brands with a shipment target of one million units. Judging from the TV production capacity of local factories, volume maxes out at 2 million units. Haier is forecast to become the biggest winner of the Russian-Ukrainian war.
Soaring shipping costs portend possible further downgrade of 2022 TV shipments
Due to factors such as reduced shipments and inventory control, the two Korean brands have gradually adjusted their purchase volume of TV panels in the near term, relegating 32- and 43-inch TV panels, units that had an opportunity to increase in price in April 2022, to a downward price trend again. Due to falling demand for TVs and IT, concerns over panel overcapacity are overwhelming and some panel manufacturers have decided to begin gradual capacity adjustment in April 2022.
Of the challenges plaguing the TV market in 2022, in addition to the existing problem of the COVID-19 pandemic, the Russian-Ukrainian war and rising global inflation also add variables to demand. In addition, cargo container shortages and port congestion increased shipping costs significantly in 2021, indirectly inflating the cost of TV sets with costs rising as TV sizes grow. Even though current panel pricing has dropped by 30% to 40% compared with its high point in 2021, no expected reduction in freight costs in 2022 will inevitably affect the scale of branded promotions and stocking during the peak season of overseas markets in 2H22. Therefore, there is still room for TV shipments in 2022 to be revised downward.
According to TrendForce, the consumer electronics market will feel the brunt of the weakening stay-at-home economy, the pandemic in China, international tensions, and rising inflation in 1H22. Coupled with the traditional off-season, demand for relevant applications such as PCs, laptops, TVs, and smartphones has cooled significantly and downstream customers have successively downgraded their shipment targets for the year, while demand for automotive, Internet of Things, communications, and servers products remain good. At the same time, the supply chain will build higher inventories in general to mitigate the risk of material shortages due to transportation impediments induced by the spread of the pandemic and the ongoing war between Russia and Ukraine.
Due to the prolonged lead-time of semiconductor equipment and limited new capacity in 1Q22, the overall foundry capacity utilization rate remains fully loaded, in particular, component mismatch issues continue for parts produced at mature nodes (1Xnm~180nm). Looking forward to the second quarter, although growth in global wafer production capacity remains limited, due to weak demand for end products, continuing international tension, and China’s forced lockdowns and supervision due to the recent spread of the pandemic, there is an opportunity for the supply chain to obtain a more adequate supply of wafers that were previously squeezed by production capacity.
The overall supply of key server materials improved slightly in 1Q22. In addition, due to increasing orders from ultra-large data centers, the general supply cycle of NetCom chips such as LAN IC/chip remains as long as approximately 40 weeks but the demand gap can be bridged by instituting urgent order fees, mitigating actual impact. As the aforementioned situation eases, additional orders for ODM motherboard production are moving briskly, prompting continued stocking of FPGAs and PMICs materials. NetCom chips are also overstocked and the overall market has a reached a “rich get richer” mindset. Material shortages at second-tier ODMs still stifle the production of motherboards for a small number of customers but does not affect the overall server market supply. With improvements in material supply, server shipments will increase significantly in 2Q22, growing an estimated 15.8% QoQ to 3.6 million units.
Affected by sluggish seasonal demand, the Russian-Ukrainian war, and rising inflation, market demand has cooled. Thus, material delivery issues in the supply chain have eased compared to 2H21. Although there is still a shortage of certain components, most of these shortages are concentrated in mid/low-end smartphone products. The lead time for 4G and low-end 5G SoCs is approximately 30 to 40 weeks, which is limited by production capacity planning. Since last year, the demand of the mid/low-end mobile phone market has not been met. This is followed by A+G sensors with a lead time of approximately 32~36 weeks and OLED DDIC and Touch IC with a lead time of 20~22 weeks. The production volume of smartphones in 2Q22 will be affected by the interaction of the aforementioned factors with a forecast production volume of 323 million units, or only 6% QoQ, which is lower than the performance of previous years.
Also affected by weakening end market demand, discounting client SSDs that are no longer oversupplied, Type C IC, WiFi, and PMIC all currently boast long lead times, with Type C IC the lengthiest at 20~25 weeks. However, compared with TrendForce’s assessment at the beginning of this year, the delivery cycle has not grown longer, so the lead time of these three types of products is expected to improve by the end of 2Q22. As supply chain backlog continues to improve, shipments of notebook computers (including Chromebooks) is expected to reach approximately 55.1 million units in 2Q22, down 0.7% QoQ.
5. MLCC Passive Components
From the perspective of other key components, taking MLCC as an example, demand for major consumer electronic products such as mobile phones, laptops, tablets, and TVs declined significantly in 1Q22, resulting in high consumer product specification MLCC inventory levels held by original suppliers and channel agents and this situation may continue into 2Q22. At present, the stocking momentum for automotive and industrial MLCCs has steadily increased, while consumer specification products have yet to escape the pattern of oversupply. In 2Q22, the MLCC market has the opportunity to alleviate its component mismatch issues through gradually increased production capacity and automotive and server ICs supplied by semiconductor IDM companies, driving stocking momentum at automotive power, server, fast charging, and charging/energy storage equipment OEMs. Vehicle and industrial MLCCs have the opportunity to become primary growth drivers in 2Q22 with Murata, TDK, Taiyu and Yageo as the primary beneficiaries. Consumer specification products, which account for the bulk of MLCC production from suppliers in Taiwan, South Korea, and China, may face continued market demand weakness in 2Q22 due to a slowdown in demand for mobile phones and laptops and continuing inventory adjustment by branded companies and ODMs.
Looking forward to 2Q22, not including servers, demand for end products related to the consumer category remains weak. Components that were originally oversupplied will face more severe price tests due to the imbalance between supply and demand. In terms of materials in serious short supply, more output will be transferred to products with strong demand through the deployment of internal production capacity. TrendForce believes that from the changes in PC market conditions, it can be seen in rapid changes in demand, purchasing behavior has quickly switched from the former over-ordering strategy to actively cutting orders, inducing supply chains to buck the seasonal trends of previous years. Due to the accelerated recent spread of Omicron in China and under the country’s dynamic zero-COVID policy, mandatory and sudden lockdown and control measures may cause local manufacturers to face multiple and complex supply chain problems, which will be detrimental to market performance.
As the Russian-Ukrainian war directly affects Eastern Europe and, indeed, the entire European market, the supply of raw materials has destabilized and prices continued to soar, exacerbating inflation and pummeling the global economy. In addition, lockdowns and work suspensions caused by the recent pandemic outbreak in China and the government’s insistence on a dynamic zero-COVID policy may lead to complex problems such as reductions in factory production efficiency and logistical delays.TrendForce indicates, the uncertainty of current global political and economic circumstances have upset demand for three major display applications including TVs, LCD monitors, and notebooks, overshadowing 1H22 with pressure to correct expectations.
TV panel prices nearly bottomed out, driving demand in TV market remains challenging
In terms of the TV market, due to the deleterious effect of the Russian-Ukrainian war on inflation and assuming consumer budgets remain unchanged, expenditures on non-essential items will fall, deferred demand for TV products. In addition, due to issues in 2021 such as the shortage of cargo containers and port congestion, shipping costs spiked, indirectly inflating the production cost of TV sets. Before the pandemic, shipping costs on a 65-inch TV was US$9. Last year, this jumped to US$50-US$100, scaling with TV size. Even though current TV panel pricing has plunged by 30% to 40% compared to last year’s peak, the fact that freight costs are not expected to improve in 2022 will inevitably affect TV brand promotions and scale of stocking during the peak season of overseas markets in 2H22. Therefore, TrendForce revises downward its TV shipment forecast for 2022, from the original 217 million units to 215 million units, reducing annual growth rate to 2.4%.
Stay-at-home economy effect vanishes, war worries dampen demand, dragging on demand for LCD monitors
In terms of the LCD monitor market, the scale of the 2022 market will be smaller than that in 2021 as the overall market is no longer supported by strong demand from last year’s stay-at-home economy. In addition, relatively stable past demand originating from the European market ran headlong into the Russian-Ukrainian war at the end of February. This, coupled with a subsequent butterfly effect that may lead to a downward revision in demand, as well as problems such as inflation and sustained high freight rates, make it difficult for brands to realize aggressive shipping goals. Therefore, TrendForce preliminarily revises downward its LCD monitor shipment forecast for this year, from 144 million units to 142 million units, expanding annual negative growth rate to 2.3%, without ruling out a possibility of further downward revision.
Notebook demand under downward pressure from inflation and soaring component inventories
In terms of the notebook computer market, TrendForce revises downward its original 238 million unit shipment forecast to 225 million units, a decrease of 8.5% YoY. There are three primary factors to this downgrade. First, Chromebooks benefited from the pandemic driving demand for distance education in 2021, accounting for 15% of total notebook shipments. Chromebook shipments are forecast to decline by more than 50% in 2022 as a whole, disrupting total notebook shipments by approximately 7~10%. Second, the conflict between Russia and Ukraine has caused most notebook brands to suspend shipments to Russia. Russia accounted for approximately 2% of global notebook shipments in 2021 and a suspension will also curb the demand for notebook shipments. Third, every notebook brand has revised 2022 shipment forecasts downward by approximately 10-15% on average compared to the beginning of the year, indicating that inflation has clouded these brand’s future demand outlook. The inventory of the entire supply chain including certain in-transit ODM/OEM components, continues to climb while the prices of some components continue to face downward pressure, resulting in intertwined problems and forcing notebook brands to prudently control purchasing momentum, which may further impact the upstream supply chain.
According to the latest TrendForce research, although factors such as panel and component mismatch and supply issues and the fading effects of the stay-at-home economy influenced shipments of e-sports LCD monitors (defined as refresh rates above 100Hz) in 2021, many brands targeted e-sports LCD monitors in 4Q21 with a strategy of aggressively reducing e-sports product pricing to prompt a volume surge and successfully boosted shipments of e-sports LCD monitors to 22.8 million units in 2021, with an annual growth rate of 24%. However, growth momentum will slow in 2022. In addition to long lead times, the most significant variable remains the impact of the Russian-Ukrainian war. If the war continues, it will impair European market demand and affect the shipment performance of e-sports-related products. In addition, the Russian-Ukrainian war has triggered a surge in the prices of crude oil, metal, and agricultural commodities, spiking previously growing inflationary pressure. Thus, TrendForce conservatively estimates shipments of e-sports LCD monitors at 26.1 million units in 2022, with an annual growth rate of 14%.
In terms of product types, the market share of flat-screen e-sport LCD monitors reached 59% in 2021, officially surpassing the 41% of curved monitors. Last year, when Samsung Display (SDC) faded out of the supply chain, it caused a shortage in the supply of curved panels, increasing the magnitude of price hikes. In addition, the supply of flat IPS e-sports products continued to increase, resulting in a decline in the competitiveness of the curved panel market. In 2022, the market share of flat and curved panels will remain unchanged but the supply of curved gaming panels from the two major suppliers, AUO and CSOT, will continue to grow with curved e-sports panel pricing the first to fall. The cost-effective advantage of whole curved e-sports devices has reemerged, which will bump the market share of curved e-sports LCD monitors to 43%.
In terms of e-sports product resolution, FHD (1920×1080), QHD (2560×1440), UHD (3840×2160), and Ultra-wide (2560×1080/3440×1440/5120×1440, etc.), in 2021, FHD captured the highest market share at 62.9% followed by QHD, Ultra-wide, and UHD. TrendForce believes, in addition to continuously improving e-sports product specifications, the simultaneous improvement of resolution will assist monitor brands in maintaining or improving profitability. Especially since, starting from 4Q21, the supply of 34-inch (21:9) wide-screen VA products increased significantly. This coupled with noticeable panel price reductions, expands profit margin and allows monitor brands more room to operate and is expected to drive wide-screen monitors to compete for a 13.4% market share in 2022.