![](https://csdnimg.cn/release/download_crawler_static/88113468/bg5.jpg)
5 July 2019
Taiwan Display and Hardware Sectors 5
Consumer Premise Equipment (CPE), MIFI (Mobile Wi-Fi) and various other IoT and end
devices, with also capability to operate on both sub-6GHz and mmWave. Compal
highlighted its products will first target commercial verticals given faster ramp of 5G
infrastructure on the onset, and its solutions are already in the pipeline currently under
operator’s testing/qualification for commercial directed CPE targeting 4Q19 launch. It is
also planning to work with other international carriers aside from partnership with China
Unicom.
Although many of the 5G-applications/services have already revealed in last year's MWC
Shanghai, we think the use-cases that the carriers showcased in 2019 seems closer for
commercialization in the next few years. Further out, GSMA remains optimistic on 5G
adoption in China and expects 460 mn or 28% of China's mobile connections will be via
5G by 2025, accounting for 1/3 of all 5G connections globally and will be greater than
North America and Europe combined (vs prior estimate of 430 mn in 2025).
China smartphone builds improving but display pull-
in offset by inventory control
Chinese smartphone production has been improving since 2Q19 with YoY builds turned
positive in April and May. At MWC Shanghai, smartphone brands and component
suppliers noted the aggressive pull-in by Samsung post the Huawei-ban, while Chinese
smartphone brands are expecting some recovery into 2H19 on seasonality. For Huawei,
our checks suggest its order for display components has seen mild recovery in 2H of June
after the aggressive cuts, but overall display component builds remain less than 200 mn
(vs original target of 255 mn and 1H June target of 185 mn). Our checks also suggest the
launch of Huawei's Mate 30 in 2H19 remains on track, and it also added Samsung Display
as the new flexible OLED supplier. We believe this has put pressure on BOE as it was the
main supplier for the flexible OLED panel for P30 Pro, while Novatek could also be
impacted given it is the main OLED DDI supplier for P30 Pro via BOE and LGD.
Figure 9: CN smartphone builds turning +ve YoY
Figure 10: …YTD builds also improving
Source: MIIT, Credit Suisse research
Source: MIIT, Credit Suisse research
Other Chinese smartphone makers such as Oppo, Vivo, Xiaomi, and Lenovo aims to gain
share in the overseas market but the component pull-in has not yet seen strong rebound.
Our checks with the display module makers suggest the supply chain is going through
inventory management as some module makers are trying to reduce the inventory level
from 2 months to 1-1.5 months, given the uncertainties surrounding the trade tension. As a
result, we expect the display component pull-in for China smartphone to improve in 3Q but
will be offset by supply chain's inventory management.
On 29 June, post the MWC Shanghai, US President Trump reportedly said he has agreed
that the US companies will again sell equipment to Huawei. He also added that he would
allow sales to the company where there is no national security problem. However, Huawei
remains on BIS' entity list and our conversation with the smartphone supply chain post
-60%
-40%
-20%
0%
20%
40%
60%
80%
0
10
20
30
40
50
60
70
mn units
Shipment YoY (RHS)
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
(600)
(480)
(360)
(240)
(120)
-
120
240
360
480
600
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
2014 2015 2016
2017 2018 2019
2014 YTD YoY 2015 YTD YoY 2016 YTD YoY
China smartphones (mn) YTD YoY %
Chinese smartphone
supply chain builds to
recover in 3Q19, offset
by inventory control