In the midst of the many positive outlooks for the second half of 2014 (2H14) and 2015 and the inspiration and energy injected into the industry after COMPUTEX Taipei, additional data are coming out supporting the growth and momentum for lower-priced smartphones by emerging market consumers.
HD displays edge up
As recently reported by DisplaySearch Analysts, displays for mobile phones have been dropping, although in line with usual 1Q seasonal dips, but during this same 1Q14 period, HD and FHD panels for smartphones have continued to grow. During 1Q14, flat panel displays (FPD) for mobile phone "[…] shipments fell 3%, to 441 million in Q1'14 from 484 million in Q4'13," according to DisplaySearch. Meanwhile, 720p high definition (HD) "mobile phone panel shipment increased 27%, to 67 million in Q1'14 from 53 million in Q4'13, while [flat high definition] FHD panels [for smartphones] increased 32%, to 57 million in Q1'14 from 43 million in Q4'13," according to the same report. DisplaySearch cites as driver for the increase in HD displays in the face of declines for FPD for the same market sector "the expansion of 4G LTE services," particularly in China where smartphone demand is increasing as is the competitive landscape where Chinese smartphone OEMs compete toe-to-toe with global OEMs.
Memory stabilizing on shoulders of smartphones
Similarly, there is positive change in the memory sector related to smartphone uptake in emerging markets as well as increased stability. IC Insights reflects, "With the number of major [DRAM] suppliers reduced to three, the industry is expected to enter a more mature and stable state." But competition and maturation are not alone in supporting stability in memory, importantly the ability for DRAM manufacturers to focus resources and R&D into mobile as a successful diversification strategy beyond the PC sector is paying off and will continue to strengthen their positions, lending stability to the memory market overall.
Regarding the importance of mobile memory solutions for DRAM, as IC Insight's report highlights:
[…] the DRAM ASP is forecast to be 24% higher in 2Q14 compared to 2Q13 and 74% greater than two years earlier in 2Q12. ÂÂÂ Overall, IC Insights believes that DRAM pricing, on a quarterly basis, will be significantly less volatile in 2014 compared to the past few years. ÂÂÂ With the number of major suppliers reduced to three, the industry is expected to enter a more mature and stable state.
The switch to higher priced mobile DRAM has also contributed to rising DRAM average selling prices. ÂÂÂ Shipments of smartphones and tablet PCs are increasing rapidly while shipments of traditional notebook and desktop PCs are flat or falling. ÂÂÂ To meet the needs of the growing mobile market, most DRAM suppliers have shifted their product mix to increase their output of low-power (but higher-priced) mobile DRAM and scaled back their production of PC DRAM.
Taken together, the news for the memory sector is noteworthy as the ability to enter into a stabilizing period and move to growth is important and demonstrates a successful diversification strategy having being enacted.
Market expansion continues
June 18th, tomorrow, is rumored to bring additional news to the smartphone and mobile market that could promote demand. Reported by a number of mainstream media, such as The WSJ, is the news that AT&T will be the sole carrier of the Amazon smartphone expected to be announced tomorrow. Of course, while Samsung and Apple continue to battle it out in the mature markets for leadership positions, the competitive field broadens as one moves away from the top-tier and highest-priced devices. Motorola has actively been working through 1H14 to extend their Moto line with Moto E that is to compete with Samsung for consumers wanting smartphones but unable to meet the higher prices. With the impending acquisition of Motorola by Lenovo, the ability for successful mobile reach in Lenovo's strong emerging market presence globally means there is real competition possible for Samsung. On a separate note, Reuters reported this week that Samsung is rumored to be considering expanding its manufacturing presence in South Korea to build a mobile display plant by 2020 in the same "[…] Bac Ninh province, where Samsung Electronics already has mobile phone production facilities." This would allow Samsung additional strategic capabilities and pricing control in key Asian emerging markets such as Vietnam, as Reuters reported.
Although forecasts for slowing smartphone sales still weigh on the mature market outlooks, the fact remains that emerging market consumers are demonstrably purchasing smartphones to handle both their mobile telecom needs as well as provide pathways to internet and personal computing.