Tech sales recovery boosts metal, semiconductor demand

A recovery in sales of smartphones and other consumer electronics is lifting consumption of key metals and components including semiconductors, with major manufacturers Samsung, Qualcomm and Apple all now pointing toward strengthening market conditions.

Demand for smartphones and electronics slowed in the first half of 2020, largely because of a drop in consumer spending worldwide. South Korean firm Samsung's smartphone sales revenue fell by 21pc on the year to 19.8 trillion won ($16.6bn) in April-June, and US company Qualcomm's revenue dropped by roughly 50pc to $4.9bn over the same period.

But conditions are now showing signs of improvement, with several tech manufacturing giants noting a recent recovery in sales as consumers become more willing to spend. Samsung said its mobile phone sales began to recover in June — although it declined to provide figures — and that competition is likely to ramp up in the second half of the year as tech firms attempt to make up for the January-June slowdown.

Japan's Sony bucked the downtrend, with its first-quarter sales revenue creeping up by 2pc on the year, underpinned by higher demand for gaming products. It also noted a shift toward more low-mid end smartphones during the Covid-19 pandemic, but said it expects the trend to be short-lived.

US firm Apple performed better than most during the coronavirus outbreak, with revenue rising by 11pc on the year to a record $59.7bn in April-June — including a 2pc rise in iPhone sales revenues to $26.4bn. The company also expects demand to increase later this year, underpinned by Mac and iPad sales to consumers working or studying from home, and by the iPhone SE as more customers opt for the more affordable handset over premium options such as the iPhone 11.

For chipmakers such as Qualcomm, this rise in demand for phones, tablets and gaming devices is set to boost demand considerably, particularly given the gradual introduction of 5G technology. Qualcomm estimates that sales of 5G handsets rose to roughly 50mn in April-June and forecasts that 175-225mn will be sold this calendar year.

But the company — which has just reached a high-profile licensing settlement with China's Huawei — sees Covid-19 causing some further rollout delays. "Commercial deployments of 5G networks and devices have begun and will continue through fiscal 2020 and beyond. However, the timing and scale of such deployments, in certain regions, may be delayed due to the Covid-19 pandemic," it said last week.

By Yusuf Khan