Despite the current pandemic and economic recession, OEMs are still ordering smartphone parts “as usual,” with no signs of slowing down.
Smartphone parts being ordered “as usual” despite pandemic
According to a report from Bloomberg, Murata Manufacturing Co., known for making smartphone, television, and automobile components, says that smartphone part orders aren’t decreasing despite the current global crisis. Orders for parts through February and March 2020 are keeping pace with 2019 levels. Though the company didn’t name specific OEMs directly, Bloomberg says Huawei and OPPO are two companies still ordering components from Murata. Murata parts are found in smartphones from the budget to premium segments.
Murata says that it’s uncertain about 5G, a major mobile trend, taking off at the high pace it once expected. A number of things are up in the air for smartphone makers and component makers this year. Some companies could delay launches or choose not to release products at all despite the ordering pace.
What explains the constant pace?
Smartphone releases do not happen on a whim; companies plan them months in advance. So with that said, companies place orders ahead of schedule and tend to order parts in advance of a smartphone unveil. Huawei and OPPO are moving forward with their plans for the year. Of course, they’re smartphone OEMs who need to sell smartphones to make a profit. Mobile device manufacturers (MDM) have to sell devices, like any other business with a product. So, the 2020 pace matches the 2019 pace because of OEM plans. To fail to launch smartphones for 2020 is to miss an opportunity to make money in the current market.
Why keeping the pace in smartphone parts is a problem for Huawei
OPPO is, like all Chinese OEMs, an ambitious company looking to stay afloat. Huawei, however, finds itself in a bad financial situation due to the US Ban. The company has already lost $12 billion behind the national ban and stands to lose as much as $30 billion before it’s over. And when one adds the current pandemic to the equation, Huawei stands to lose even more money. In light of its losses, compounded because of the US Ban, it would be a wise decision for Huawei to reserve some of its profit to avoid further loss. Having money is key to surviving another year in a competitive race such as the smartphone market.
Yes, there is something commendable about ambition. And Huawei has plenty of it. That’s not a problem, but it can become one if a company bleeding cash doesn’t try to hold back to save. Huawei is already losing massive amounts of money on its $2,700 Mate Xs foldable. The company says that it’s losing money on foldables to pave the way for innovation. And yet, losing money in the midst of an economic and health recession is the equivalent of rolling down a car window and throwing money into a river. It’s just not financially wise in a time of loss. Huawei has already been faced with layoffs in light of the Ban.
Smartphone makers and fiscal and moral accountability in the pandemic
In a time when global citizens are facing economic setbacks, the last thing they want to see are companies spending untold amounts of money to sell smartphones that they cannot afford. Such massive spending in this economic recession is fiscally irresponsible and inconsiderate of the losses of citizens around the world. Smartphone makers deserve applause when they make great products. They also deserve applause when they model moral accountability in such an unprecedented time.