A prominent Apple, Inc. AAPL analyst has warned of hard times ahead for Android phone makers.
Order cuts across Android Supply Chain: Major Chinese Android brands have lowered their orders by another 100 million orders since TFI Securities’ previous study March 31, analyst Ming-Chi Kuo said in a tweet.
Taiwanese Android chip provider MediaTek and US based Qualcomm, Inc. QCOM has cut 5G chip orders for the second half of 2022, the analyst noted. The former has lowered orders in the fourth quarter by 30-35%, while the latter has reduced orders in the high-end Snapdragon 8 series by around 10-15%, he added.
Qualcomm’s SM8475 and SM8550 shipping forecasts remain unchanged, he noted.
Kuo expects shipments of cameras and lenses to Android smartphone brands will fall by 20-30% in the third quarter.
“iPhone shipping is still better than Android,” Kuo said.
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Significance for shares: The 5G chip and camera are both important smartphone components, and shipping trends in the second half of these two items for Chinese Android brands suggest the peak season will remain subdued in 2022, Kuo said.
The difficult situation reflects weak demand trends in China, Europe and new markets, he added.
Order cuts for MediaTek and Qualcomm for the fourth quarter and second half of the year suggest that demand may not improve until the first quarter of next year, given the longer delivery time for 5G chips compared to general components, the analyst said.
The analyst expects further downgrades of consensus revenue and earnings forecasts for MediaTek and Qualcomm for the period from the third quarter of 2022 to the first quarter of 2023.
“The dive into some stocks may recently provide opportunities to buy a bounce, but suggests investors avoid Android smartphone-related stocks,” the analyst said.
Qualcomm closed Friday’s session down 0.79% to $ 131.60, according to Benzinga Pro data.