New markets to increase smartphone growth: bank

STILL HOT::Daniel Heyler from Bank of America Merrill Lynch disagreed that smartphones were no longer in vogue, saying that they are in a new phase of growth

By Crystal Hsu  /  Staff reporter

Thu, Mar 14, 2013 - Page 14

Bank of America Merrill Lynch yesterday forecast strong growth momentum for smartphones and tablets this year and beyond as mobile and connectivity devices gain increasing popularity in China and other emerging countries.

The US bank has a negative outlook on the PC sector, as it is set to continue to be eroded by mobile devices, especially in the corporate segment, said Daniel Heyler, head of Bank of America Merrill Lynch’s global semiconductor research.

“This year will see significant growth in smartphones outside of China, while tablets begin there and will be a good driver next year,” Heyler told reporters on the sidelines of an investment conference, which was attended by 150 Taiwanese and foreign firms, as well as 300 institutional investor representatives.

Heyler said he disagreed with observations that smartphones had become outdated and said that they are actually experiencing a new stage of growth fueled by emerging markets.

Smartphones cost US$170 on average in China a year ago, but sell at US$215 now because consumers are willing to pay more for better handheld devices that have more functions and faster speed, he said.

The trend suggests strong long-term demand for chipmakers, packagers and other companies in the supply chain and higher average selling prices, Heyler said.

Merrill Lynch forecast that the global logic chip market would grow by between 12 percent and 14 percent this year and next year, driven by increasing demand for low-power chips licensed by the UK-based chip designer ARM Holding PLC in emerging markets and China.

“What happens in China could also take place in other emerging markets,” Heyler said, adding there could be huge business opportunities given that China has a population of 6 billion, but produces only 800 million phones, Heyler said.

Chinese brands account for 65 percent of the Chinese market, while Samsung Electronics Co devices account for half of the remaining 35 percent among global brands, he said.

The trend could put pressure on non-premium brands such as HTC (宏達電), Motorola Mobility Holdings Inc, LG Electronics Inc and Nokia Oyj, he added.

Worldwide, Samsung is forecast to sell 290 million smartphones this year, up 35 percent from last year, while Apple Inc may sell 180 million iPhones this year, up 33 percent year-on-year, according to Strategy Analytics.