Handset inventories under control, says iSuppli
Global inventories of mobile handsets currently held at handset OEM's is 75 million units. Given current revenue levels, iSuppli believes this is indicative of a global wireless supply chain that has reduced its stockpiles to an appropriate, supply/demand equilibrium.
On a dollar basis, handset inventories declined to US$6.2 billion by the end of the first quarter, down from the recent high of US$8.6 billion in the third quarter of 2008. "At this level of inventory, OEMs have no reason to produce more handsets than demand would dictate," said Carlo Ciriello, analyst, financial services at iSuppli.
Handset stockpiles amounted to 30 Days of Inventory (DOI) at the end of the first quarter. This means inventories were slightly lean compared to normal levels, which, again, is proper given the current revenues and the weak macro-economic conditions. "However, there is an element of risk," Ciriello warned. "Lean inventories mean that safety stocks are low. While OEMs now are able to gain better control of pricing and distribution, they also will be less capable of capitalizing on a significant increase in demand, should there be a surprise upside."
iSuppli expects OEM inventories to remain lean in the second quarter, as mobile handset industry revenue growth remains flat during the period. Inventories should remain flat at the 30-day level.
For the third quarter, iSuppli forecasts the mobile handset market will return to growth, with a 7.8% sequential increase in revenues. The increase in revenue will be driven by a rise in orders from a near standstill before. Furthermore, inventories will rise slightly, by about 5%. iSuppli forecasts the corresponding rise in demand and inventories will keep DOI near 30.
For the fourth quarter, iSuppli forecasts mobile handset revenue will rise by 8.1%. At the same time, inventory will decline by 1.5%, conforming to seasonal norms. This will reduce DOI below 30, a healthy inventory position as the market enters the seasonally slow first quarter.
2009 hang up for mobile phones
While market conditions for mobile phones are expected to stabilize in the second half, 2009 will still be a weak year for the market. Global mobile handset unit shipments in 2009 are forecasted to decline to 1.1 billion units, down 12% from 1.3 billion in 2008. Annual revenues are forecasted to fall 18% from 2008.
On a dollar basis, handset inventories declined to US$6.2 billion by the end of the first quarter, down from the recent high of US$8.6 billion in the third quarter of 2008. "At this level of inventory, OEMs have no reason to produce more handsets than demand would dictate," said Carlo Ciriello, analyst, financial services at iSuppli.
Handset stockpiles amounted to 30 Days of Inventory (DOI) at the end of the first quarter. This means inventories were slightly lean compared to normal levels, which, again, is proper given the current revenues and the weak macro-economic conditions. "However, there is an element of risk," Ciriello warned. "Lean inventories mean that safety stocks are low. While OEMs now are able to gain better control of pricing and distribution, they also will be less capable of capitalizing on a significant increase in demand, should there be a surprise upside."
iSuppli expects OEM inventories to remain lean in the second quarter, as mobile handset industry revenue growth remains flat during the period. Inventories should remain flat at the 30-day level.
For the third quarter, iSuppli forecasts the mobile handset market will return to growth, with a 7.8% sequential increase in revenues. The increase in revenue will be driven by a rise in orders from a near standstill before. Furthermore, inventories will rise slightly, by about 5%. iSuppli forecasts the corresponding rise in demand and inventories will keep DOI near 30.
For the fourth quarter, iSuppli forecasts mobile handset revenue will rise by 8.1%. At the same time, inventory will decline by 1.5%, conforming to seasonal norms. This will reduce DOI below 30, a healthy inventory position as the market enters the seasonally slow first quarter.
2009 hang up for mobile phones
While market conditions for mobile phones are expected to stabilize in the second half, 2009 will still be a weak year for the market. Global mobile handset unit shipments in 2009 are forecasted to decline to 1.1 billion units, down 12% from 1.3 billion in 2008. Annual revenues are forecasted to fall 18% from 2008.
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