Rival Handset Makers Face Inventory Losses Following China iPhone SE Launch

[MacRumors]

The launch of the iPhone SE in China has squeezed market share from local brands causing handset makers to rein in their inventory stockpiling for future component shipments, according to sources in the supply chain (via DigiTimes).

The introduction of the relatively low-priced iPhone SE into the Chinese market has reportedly affected the performance of brands including Huawei, Xiaomi Technology, Vivo, and Oppo. The intensified competition means handset makers are reluctant to build up inventories based on what they now perceive as over-confident shipment prospects, said the sources.

The conservatism follows similar trends last year when shipment numbers failed to meet expectations. Camera module makers in particular were exposed to a high level of inventories in 2015 after optimistic shipment projections, but ended up shipping only 70 to 80 percent of their stockpiles. As a result, camera module suppliers have grown skeptical of prospects from vendors marketing smartphones with dual lenses.

Sources also noted that Apple's efforts to upgrade the internal voltage of its power supply devices from 15 volts to 20 volts to improve charging efficiency has left power supply makers with excessive inventories.

Apple is expected to include a dual-lens camera in the iPhone 7, set to be released in the fall of this year. However, according to respected KGI Securities analyst Ming-Chi Kuo, the dual camera will be exclusive to Apple's 5.5-inch iPhone.

Article Link: Rival Handset Makers Face Inventory Losses Following China iPhone SE Launch

 

[tigres]

We seem to be giving DigiTimes more front page news as of late.

 

[Pakaku]

I guess those smartphone makers just have more incentive to make something competitive.

As for the waning power-supply producers, can't say I'm worried about them after seeing their track record.

 

[appledefenceforce]

But...but the arm chair execs on Macrumors and WJ analysts told me this is a flop and Apple is doomed?????

 

[djcerla]

Lackluster launch my a**!

 

[Crosscreek]

The SE is a great phone for someone who does not need or want a huge phone. Apple did it right and listened to its customers for once.

 

[keysofanxiety]

IMO, Apple should also contemplate selling the 5S at a considerably discounted rate in India and China. Considering you can pick them up for under £150/$200 from eBay retailers in A grade condition, and it's still a very capable phone, Apple would dominate marketshare to have that as an option too.

I guess the only issue is that it looks similar to the 5SE, and has a similar name, so that could cause confusion.

 

[Scottsoapbox]

An 'Inventory Loss' is a reduction in a firm's current assets due to damage or theft.

That is not what is happening in this story.

 

[smacrumon]

The 4 inch size phone was always a hit. Who knows what Apple was thinking when it chose to ditch that size when introducing the iPhone 6/6S form factor. Apple should have released 6/6S in three sizes. If it had, it wouldn't have needed to create a third version of iPhone 5 and it wouldn't have the fragmentation of lacking 3D touch on a 4 inch phone either. I guess it's lesson learnt for Apple and this Chinese example further reinforces the mistake. 4 inch is a popular size, always has been, always will be.

 

[Three141]

The SE is a great phone for someone who does not need or want a huge phone. Apple did it right and listened to its customers for once.

I was surprised that people were complaining about this, it a good update, whack in force touch for next year with usual speed bump and some might return to annual updates.

 

[alphaod]

I know a lot of people think the iPhone SE is stupid since it's basically the 5S, but I like it quite a bit.

 

[nStyle]

But...$400 is not cheap...I know that some of the "bargain" brands don't stock exclusively cheap devices, but they still are much cheaper than $400 on average.

 

[alexgowers]

I'm really not sure the article makes sense. It's making out that the iPhone SE is causing phone sales of other brands to fall and affect makers of phone parts. But surely this makes no sense as contracts and numbers of parts are linked to manufacturing and there is very little stockpiling going on of these parts. They can also be sold to other buyers and would surely only affect prices at which the units are sold.

I know that while the price of the iPhone SE in USA, Europe isn't compelling. I think apple has priced it cheaper in Chinese markets.

If anything makers of inventory for phones are cutting back production for later in the year when the new iPhone comes out not now because of this phone release. This article just seems like someone attaching cause and effect that are totally unrelated.

 

[vooke]

Slash prices on 5S in these markets

 

[69Mustang]

I'm really not sure the article makes sense. It's making out that the iPhone SE is causing phone sales of other brands to fall and affect makers of phone parts. But surely this makes no sense as contracts and numbers of parts are linked to manufacturing and there is very little stockpiling going on of these parts. They can also be sold to other buyers and would surely only affect prices at which the units are sold.

I know that while the price of the iPhone SE in USA, Europe isn't compelling. I think apple has priced it cheaper in Chinese markets.

If anything makers of inventory for phones are cutting back production for later in the year when the new iPhone comes out not now because of this phone release. This article just seems like someone attaching cause and effect that are totally unrelated.

Glad I'm not the only one who saw the disconnect. The connection to the SE is tenuous at best. Says right in the article that the slowdown is a continuation of a trend from last year. There was no SE last year.

The conservatism follows similar trends last year when shipment numbers failed to meet expectations. Camera module makers in particular were exposed to a high level of inventories in 2015 after optimistic shipment projections, but ended up shipping only 70 to 80 percent of their stockpiles. As a result, camera module suppliers have grown skeptical of prospects from vendors marketing smartphones with dual lenses.

 

[blackcrayon]

I know a lot of people think the iPhone SE is stupid since it's basically the 5S, but I like it quite a bit.

Or it's basically the 6s just smaller and lacking a few other features that not everyone cares about.
I'd never refer to the difference between the A9 and the A7 as "basic", but that's me...

 

[gpat]

I know a lot of people think the iPhone SE is stupid since it's basically the 5S, but I like it quite a bit.

Actually I think it's smart since it's basically the 6S

 

[nt5672]

An 'Inventory Loss' is a reduction in a firm's current assets due to damage or theft.

That is not what is happening in this story.

Maybe according to GAAP, but a) China does not follow GAAP, and b) scrap for whatever reason could be considered an 'Inventory Loss'. Maybe they just classed it as defective because it would not sell.

 

[AronDraws]

Ive had my SE since launch day and I am ridiculously happy with it. Great battery life so far, so much more space that I could afford, and it's overall just a very very satisfying phone. Im thankful it was made affordable! <3

 

[IJ Reilly]

Glad I'm not the only one who saw the disconnect. The connection to the SE is tenuous at best. Says right in the article that the slowdown is a continuation of a trend from last year. There was no SE last year.

Noticed the same thing. The article blends together information about handset makers and parts suppliers in a way that does not make sense.

 

[kdarling]

Noticed the same thing. The article blends together information about handset makers and parts suppliers in a way that does not make sense.

Yep. The title of the DigiTimes article is:

"Handset supply chains in Taiwan, China face inventory losses"

That article notes that it's the parts suppliers who are ending up with excess inventory, whereas the phone makers are simply making fewer phones.

 

[IJ Reilly]

Yep. The title of the DigiTimes article is:

"Handset supply chains in Taiwan, China face inventory losses"

That article notes that it's the parts suppliers who are ending up with excess inventory, whereas the phone makers are simply making fewer phones.

A muddled source article is part of the problem. It's unclear how the SE is involved with reduced demand in the supply chain, unless the suppliers they reference make parts Apple's competitors but not for Apple. They may indeed have meant that but it sure isn't clear from what was said.

 

[TallManNY]

The SE is a great phone for someone who does not need or want a huge phone. Apple did it right and listened to its customers for once.

And it is a good phone (not great) for someone who wants to spend $400 instead of $750. So yep it is going to sell nicely.
[doublepost=1461336935][/doublepost]

Or it's basically the 6s just smaller and lacking a few other features that not everyone cares about.
I'd never refer to the difference between the A9 and the A7 as "basic", but that's me...

Or the extra RAM or the better camera.

I totally agree it is much more the 6s than it is the 5s.

 

[firewood]

If there is any factual basis to this story at all, here's possibly what happened:

Some of Apple's competitors in China assumed that "Apple is doomed!", and that a small old mobile phone design like the SE would not sell well. Instead the competition assumed that consumers would buy a lot more of their much cheaper new mobile phones after consumers compared their product to the SE.

But the above turned out to be false.

Apple's competitors had previously ordered tons of phone parts, which the part suppliers rushed to manufacture ahead of time to get the business. All these orders were cut since the phones aren't selling. Thus these part suppliers ended up with tons of excess inventory that they can't sell at any profitable price, and that will be old technology next year. So these part suppliers had to take massive write downs on stale inventory.