Smaller phone makers to struggle report suggests

Smaller phone makers to struggle report suggests

Smaller manufacturers face a battle as margins are ‘squeezed harder than ever’, the latest mobile phone forecast from CCS insight has shown.

The global forecast from the analyst firm found that the smartphone market has peaked at around 2 billion units per year. The results echo findings from Deloitte which also suggested the market had peaked.

CSS Insight said that the trend was particularly troubling for smaller phone makers as scale would be of increasingly important. Marina Koytcheva, director of forecasting at CCS Insight, said: ‘As growth is depleting, competition is intensifying and it comes as little surprise that margins are being squeezed harder than ever. Companies without the scale advantages of manufacturers such as Samsung, Apple or Huawei will find it much harder to make money’

‘After years of analysts and commentators talking about mobile phone market peaking within the visible horizon, it has now reached that point.’

 Component price hike

CCS Insight has also predicted that there will be component price hikes in the second half of 2016, ‘stemming from shortages of screens, camera modules and memory’. The analyst’s explained that these issues were a result ‘of a combination of the biggest names snapping up all available output and recent earthquakes in Taiwan that have disrupted production.’

Koytcheva, warned that this would make things even tougher for the smaller brands: ‘This is the first time we have seen component price rises for years. Phone makers with low volumes will find it almost impossible to turn a profit in these conditions without raising the prices of their products. It's a great opportunity for the big players like Huawei and Samsung to exploit their scale, apply pricing pressure and strengthen their leading positions.’

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