Supply Chain Research

Samsung Electronics have announced the launch of their Galaxy Note 8 “phablet” on September 15. The new model follows trouble Note 7 last year that had to be withdrawn from production after battery problems. Expectations about the arrival of the Note 8, alongside the forthcoming iPhone refresh from Apple, may explain a slow-down in U.S. imports.

Panjiva data shows a 14.5% drop in shipments in June, following two positive months. Shipments from South Korea and Vietnam – a proxy for Samsung even though LG also produce in both countries – fell by 28.6%. Shipments from China fell by a more modest 9.6%, and were up 8.7% for the quarter as a whole.

Chart compares change in U.S. phone handset imports on a year earlier, segmented by country of origin. Source: Panjiva

The positive news is that there has been a marked step-up in average import values per handset. On a rolling quarterly basis total impor values increased by 22.1% on a year earlier to $227/handset. The most marked increase has been from Taiwan where there was a 60.3% rise to $326/handset. That likely reflects shipments of Google’s Pixel which is produced by HTC there.

Data for U.S. imports of phones under HS 8517.12. Chart shows value per unit calculated as total customs value divided by units shipped. Source: Panjiva

The slowdown in U.S. imports may prove to be fleeting. Chinese export data showed a 49.9% rise in the dollar value of exports in June – which will hit U.S. inventories in July. Unfortunately for Chinese-based manufacturers that came at the same time as a slowdown in shipments to the rest of the world, including a 3.7% drop in shipments to the EU and 53.6% to Japan.

Chart segments Chinese exports of mobile phones by destination. Source: Panjiva

Among the major manufacturers in China, Samsung’s global exports rose the quickest among the major manufacturers, rising by 46.6% in June compared to a year earlier, and 48.9% for the second quarter overall. The number one manufacturer, Foxconn, saw a drop of 13.5% while Pegatron jumped 30.0%. That may reflect a shift in purchasing allocations by brand owners, and specifically Apple, though there isn’t sufficient data to be sure.

Taking Foxconn and Pegatron together though shows a modest 4.5% rise in June compared to a year earlier. Shipments from both companies will ramp up more aggressively in September and October as the bulk of phone deliveries for purchase ahead of the holidays occur in the major end markets.

Data for exports from China of products categorized HS 8517.12, filtered by names of companies and known affiliates Source: Panjiva