Murata Sees a 10% Drop in Consumer Demand
Japanese component manufacturer, Murata Manufacturing Co. Ltd., expects to see a decline in orders from handset producers this year, as the coronavirus pandemic weakens consumer demand.
The company warned that the demand from phone makers could drop by 10% on Thursday. Meanwhile, its overall sales in the current fiscal year might fall by nearly 7% due to COVID-19.
The forecasts came after the Kyoto-based firm reported an operating profit gain of ¥52.4 billion ($492 million) for the quarter ending in March 31. The figure ended higher than the ¥41.7 billion generated in 2019.
COVID-19 Casts a Shadow on Murata’s Demand Outlook
Being a major electronic component supplier to the global smartphone market, Murata’s performance acts as an indicator for the mobile industry’s manufacturing outlook.
The published forecast was clearly a negative surprise, according to analyst Hideki Yasuda.
The market had expected Murata to see smartphone production to rise or at least stay flat. A 10% decline shows how serious the impact from COVID-19 is on the global economy, Yasuda said.
Smartphone sales took a huge blow during the period of coronavirus-enforced lockdowns. China, the world’s largest phone market, registered a record drop. As recently as this month, the makers seemed unfazed and were keeping to their plans and orders with Murata.
The company provides electronic components, like chip capacitors, batteries, and circuit boards to key handset makers, including Apple Inc. and Huawei Technologies Co. Ltd.
Earlier in April, market researcher International Data Corp. predicted the pandemic would send global smartphone deliveries down by 2.3% to 1.3 billion units in 2020.
The research group also saw COVID-19 as a catalyst to a 10.6% drop in first-half shipments. This was followed by an upturn from the second half, with 5G gaining demand in 2021.
Norio Nakajima, one of the firm’s veterans, due to be president in June, made a statement earlier this month. He said that he saw continued robust demand from handset manufacturers despite the economic hit from the virus.
That outlook, however, appeared uncertain now, according to Chairman Tsuneo Murata.
The component supplier said it plans to spend ¥200 billion in the current fiscal year to increase production capacity and set up plants and research establishments.
Its manufacturing facilities in China and Japan have resumed operations after shutting down temporarily to contain the spread of the pandemic, while its factories in the Philippines and Malaysia are set to reopen in mid-May.
