Mobile industry bellwether Murata Manufacturing Co expects Apple Inc to reduce iPhone 14 production plans further in the coming months because of weak demand, which would force the supplier to again cut its outlook for its handset-component business.
“Judging by handset availability in stores, I see a downward revision happening,” Murata president Norio Nakajima said in an interview. “I hope that it won’t be too deep.”
Apple has trimmed iPhone output on softening demand and might slash production further, Bloomberg reported last month.
Photo: Bloomberg
Nakajima did not identify Apple by name — a common practice for suppliers to the infamously secretive company. Yet Apple is his key US customer and he did not deny that his references were to the iPhone giant.
Murata has already cut its global smartphone production forecast for this fiscal year a few times. The company initially anticipated in April that handset makers would produce 1.37 billion units, a slight increase from 1.36 billion in the previous fiscal year.
It lowered its prediction to fewer than 1.2 billion in October, then 1.09 billion two weeks later — both because of weaker demand for lower-end phones in China.
Nakajima said the latest estimate is 1.08 billion, a slight downward revision because of slower sales of handsets by Chinese manufacturers.
“If our forecast was to fall further, that would be because of the US customer,” he said.
The Kyoto, Japan-based manufacturer is a linchpin of the smartphone industry, providing electronic modules and components for Apple’s iPhones, Samsung Electronics Co’s Android smartphones and China’s leading device makers.
The global smartphone market is set to keep deteriorating next quarter, even as some Chinese handset makers are planning to release new models during the period, Nakajima said.
The manufacturers are confident that the new phones would sell well, but Nakajima said he has his doubts as the incoming models do not have enough enticing new features.
The phone market would start recovering “at a gradual pace” in the fiscal year starting in April, he said.
Despite the recent weakness in China, the world’s second-largest economy would remain an important market for the electronics industry, Nakajima said.
Some of Murata’s customers are shifting their production to Vietnam, India and other Asian regions, but a complete pullout from China is unlikely, at least during the next five years or so, he said.
Nakajima is running a long-term project to build a production chain for Murata that operates completely in China, using local parts. The move is aimed at addressing a potential deterioration in US-China relations — such as Beijing mandating that all products sold in the country rely on local components.
Information security is a concern, and Murata is seeking to ensure that its proprietary know-how related to manufacturing technologies is not compromised, Nakajima said.
The company might make mature products such as multilayer ceramic capacitors in China, but would not move production of some newer components to the country, he said.
Murata makes 65 percent of its products in Japan.
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