- Joined
- Jun 22, 2015
- Messages
- 46
- Points
- 0
Wave of closures in China for suppliers of smartphone parts
Staff Reporter 2015-10-26 17:55
The Huawei Mate S smartphone. (Photo/Xinhua)
Numerous smartphone component suppliers in China have been closing since the second half of 2014 due to financial problems as smartphone sales decline, Shanghai's National Business News reports.
After Shenzhen-based Fosunny Electron Technology, a major component supplier to domestic smartphone makers Huawei and ZTE, declared bankruptcy on Oct. 8, other makers of smartphone components in Guangdong province announced earlier this month that they are to suspend operations due to financial troubles.
The three companies reportedly incurred 1.6 billion yuan (US$250 million) in debt, far more than that sustained by Fosunny, according to the report.
From the second half of last year, a domino effect of closures has been in effect in the smartphone supply chain, the report said.
Industry experts have attributed the massive closures to explosive growth in the smartphone market in 2013, growth that could only drop off as the market became saturated. In 2014, China's smartphone shipments dropped 8.2% year-on-year.
Other factors have been the ineligibility of component makers to go public and the rapidly evolving technology in the industry which makes their products quickly obsolete, said Sun Yanbiao, an industry analyst.
The recent round of closures was inevitable because some component producers had resorted to price cuts to boost sales and increase their market share and because they failed to raise funds from the equity market, Sun added.
In addition, high inventory levels made it financially impossible for small and medium enterprises especially to survive in the market, according to Sun.
