IT Supply Chain – smartphone sales drop, smart home-device market grows

IT supply chain

Ian Nethercot, MCIPS, Supply Chain Director at Probrand shares his learnings on the latest IT supply chain developments.

There were some gloomy patches and brighter spots in the IT supply chain market in July as the economy continued to reel from the impact of the pandemic. Smartphone sales dropped by almost a quarter in Europe during Q2, and semiconductor sales were flat. Conversely, PC sales rocketed in the region, mirroring a general rise in global tablet shipments as everyone looks for new computing power whilst at home.

To help navigate the ups and downs and maintain a clear view of what represents a fair price, here are some of the latest developments and major movements that are influencing key IT product categories.

Exchange rate

The Euro had a great month against the US dollar in July, as did most currencies. Commentators have attributed this to factors including the spread of the coronavirus across the States and rising expectations of inflation in the US. It started at 1.1237 and rose steadily throughout the month to hit 1.1837 on July 31.

Things were more volatile in EUR/GBP land. The exchange rate started out at 0.9044 before dipping to 0.9004 on July 4. It rallied slightly to hit 0.9043 the following Monday before plummeting to a monthly low of 0.8947 on July 11. From there, it began a marked recovery to 0.9066 on July 14, climbing slightly more after that and then falling, in an arc that ended at 0.9031 a week later. Then came another rally that took the euro to its monthly high of 0.9122 on July 27. It couldn't sustain the momentum, though, and slipped to 0.9021 by the month's end.

Touching its highest level against the dollar in two years, the EU adopted a €750bn ($857bn) stimulus package to help countries weather the financial storm from the health crisis. It will distribute half of that money as grants rather than loans, and will focus on funding across three pillars: helping business recovery, economic reform, and spending to protect against future crises. This comes after the European Commission warned that it expects the economy to shrink 8.3% in 2020, revised from a projected 7.4% shrinkage two months prior.

Phone and Tablets

According to IDC, Huawei topped Samsung as the world's number one company in smartphone shipments during Q2 2020. It shipped 55.8m smartphones during the quarter, down 5.1% YoY, but still grabbed a 20% share of a rapidly declining market.

Global smartphone shipments fell 16% YoY during Q2 to 278.4m. Counterpoint noted a 24% YoY drop in European sales during Q2, with Chinese companies now holding 35% of the market share in that region. Samsung leads Apple heavily at 35% and 17% market share respectively.

Worldwide tablet shipments surged by 26% YoY in Q2 to reach 37.5m units. Canalys cited affordable access to computing power as a primary reason for this as the workforce moves towards a remote model.

Traditional PCs

According to Gartner, worldwide PC shipments grew 2.8% in Q2 following a first-quarter slump. Mobile PC growth was strong, driven by remote working. However, the analyst warned that this uptick may not last, caused by temporary remote working pressures. Lenovo led the pack in Q2 with 25% market share, followed by HP (24.9%) and Dell (16.4%).

IDC noted the strongest traditional PC market in the EMEA region since 1998, registering a 30.6% YoY growth driven by the lockdown. The biggest growth was in the consumer sector, with sales spiking 51.2%. The real hot spot was notebooks, which analysts said have filled in as second machines for single-PC households. Consumer sales jumped 61.4% in that category. HP leads PC sales in Western Europe with a 29.3% market share, the analyst company said.

Premium Ultramobiles & Wearables

The smart home device market in Europe grew 3.8% YoY in Q2, with smart speakers experiencing a 17.4% increase. The smart display subcategory has been especially buoyant.

This isn't a category I normally include but worth a mention: COVID-19 is accelerating activity in the drone space. As such, we may see more sales of these devices for commercial customers in the next few quarters.

In other news, augmented reality is hard. Bose decided not to continue pursuing the sector, following ODG and Daqri out of the race. No wonder Apple is taking its time with those rumoured AR glasses. 

Monthly statistics

Stock increases experienced a high of 12,157 on July 16. Stock decreases peaked early at 24,215 on July 2.

Price increases hit a high of 27,501 on July 15, across a variety of product categories. Meanwhile, price decreases hit a high of 41,056 on July 9.

 

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