Smartphone sales to drop after Japan disaster?

The disruption to the global supply chain caused by the closure of Japanese factories may put the brakes on the irresistible rise of the smartphone...

by Emma Haslett
Last Updated: 01 Jun 2011
Smartphones have been one of the great success stories of recent years. Not only has the technology evolved at an impressive speed, but during the recession, sales have continued to rise, bucking the general downward trend. But a spanner (or perhaps a lithium battery) has been thrown in the works of this £100bn industry. The terrible events in Japan have led to the closure of lots of factories that make vital smartphone components - and this could reduce sales by as much as 5% this year, according to one analyst quoted in the Guardian. Although this is unlikely to be anything more than a temporary blip in the industry's upward trend...

Apparently, many of the industry’s supply chain problems stem from a company called Kureha Corp, which makes 70% of the world’s heat-resistant polyvinylidene fluoride – this, as we're sure you already know, is employed as an adhesive in the lithum ion batteries used in smartphones, tablet computers and laptops. The factory, which is located in Ikawi in the Fukushima Prefecture, closed shortly after the quake a month ago. And although it plans to restart production at the end of April, many of its customers are already running low on supplies.

We’ll find out over the next few weeks which companies have been hit hardest by Japan-related supply chain issues; first-quarter results for Apple, Sony Ericsson and Nokia are all due out between April 19 and 21. But it might well cause problems for the likes of BlackBerry owner RIM, which is due to release its brand new Playbook tablet in a couple of weeks’ time.

On the other hand, the situation may have sorted the men from the boys, demonstrating which companies were agile enough to act fast and secure alternative supplies. Chief among those was, naturally, Apple; along with Samsung and HTC, Apple sourced supplies from China, Taiwan and Korea, which could give these companies the edge over the competition in the next few months.

Still, companies tend to stockpile about five weeks’ worth of components, plus six or seven weeks’ worth of finished phones. So the true impact of the disruption may not be felt until the back end of next month. Apple fans may yet have to wait a little longer for their iPhone 5.


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