Since mid-to-late march, affected by the global spread of the epidemic, India, Vietnam, the Philippines, Malaysia, Singapore and other countries have announced “city closure” measures ranging from half a month to a month, causing investors to worry about the impact of the global electronics industry chain.
According to the analysis of India, Singapore, Vietnam and other markets, we believe that:
1) if the “city closure” in India is implemented for a long time, it will have a great impact on the demand for mobile phones, but a limited impact on the global supply chain;
2) Singapore and Malaysia are major exporters of semiconductor products in southeast Asia and an important link in the global supply chain. If the epidemic intensifies in Singapore and Malaysia, it may affect the supply and demand relationship of sealed test and storage products.
3) the Chinese manufacturing relocation undertaken by Vietnam in the past few years is the main assembly base in southeast Asia. The strict control in Vietnam may affect the production capacity of Samsung and other brands, but we believe that the Chinese production capacity may be replaced.
Also be aware of;
4) the impact of “city closure” in Philippines and Thailand on MLCC and hard disk supply.
India’s closure affects mobile phone demand and has limited impact on the global supply side.
In India, a 21-day “city closure” has been implemented since March 25, and all online and offline logistics have been suspended.
In terms of volume, India is the world’s second largest mobile phone market after China, accounting for 12% of global mobile phone sales and 6% of global mobile phone sales in 2019. ”City closure” has a great impact on Xiaomi (4Q19 India share 27.6%, India 35%), Samsung (4Q19 India share 20.9%, India 12%), etc. However, from the perspective of supply chain, India is mainly an importer of electronic products, and the industrial chain is mainly assembled for the Indian domestic market, so India’s “city closure” has little impact on the rest of the world.
Singapore and Malaysia are the largest exporters of electronic components in southeast Asia, focusing on testing and storage.
Singapore and Malaysia are the largest exporters of electronic components and components in southeast Asia. According to UN Comtrade data, Singapore/Malaysia’s electronic exports reached us $128/83 billion in 2018, and the CAGR of 2016-2018 was 6% / 19%. The main products exported include semiconductors, hard drives and so on.
According to our review, at present, 17 of the world’s major semiconductor companies have important production facilities in Singapore or nearby Malaysia, among which 6 of the major test companies have production bases in Singapore, ranking the top in terms of the number of industrial chain links. According to Yole, in 2018, the new and ma sectors accounted for about 7% of global revenue (by location), and micron, a memory-head company, accounted for nearly 50% of its capacity in Singapore.
We believe that further development of the new horse outbreak will bring greater uncertainty to global sealed test and memory production.
Vietnam is the biggest beneficiary of the manufacturing exodus from China.
From 2016 to 2018, Vietnam’s electronics exports grew by 23% of CAGR to 86.6 billion us dollars, making it the second largest electronics exporter in southeast Asia after Singapore and an important production base for major mobile phone brands such as Samsung. According to our review, hon hai, lishun, shunyu, ruisheng, goer and other electronic components manufacturers also have production bases in Vietnam.
Vietnam will begin a 15-day “whole society quarantine” from April 1. We expect that if the control intensifies or the epidemic intensifies, the assembly of samsung and other brands will be affected, while the main production capacity of apple and Chinese brand chain will still be in China and the impact will be less.
The Philippines pays attention to MLCC production capacity, Thailand pays attention to hard disk production capacity, and Indonesia has less influence.
The capital of the Philippines, Manila, has gathered factories of world-leading MLCC manufacturers such as Murata, Samsung Electric, and Taiyo Yuden. We believe that Metro Manila will “close the city” or affect the supply of MLCCs worldwide. Thailand is the world’s major hard disk production base. We believe that the “closure” may affect the supply of servers and desktop PCs. Indonesia is the country with the largest population and GDP in Southeast Asia and the largest mobile phone consumer market in Southeast Asia. In 2019, Indonesia accounted for 2.5% / 1.6% of global mobile phone shipments and value, respectively. The overall global share is still low. We do not expect to bring global demand. To have a greater impact.