Global mobile phone market to fall by 6.6 percent next year

By siliconindia   |   Wednesday, 17 December 2008, 23:40 IST   |    1 Comments
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Helsinki: Mobile phone manufactures may go through a tough time in the year 2009 as the global market volumes is likely to drop by 6.6 percent next year and 5.7 percent in the fourth quarter as consumers cut spending, finds a recent Reuters Poll. These two periods were considered to be the strongest periods due to holiday sales. In contradiction, majority of Analysts had forecasted that the market would rise 2.6 percent in 2009 in a similar poll in early November. But, later the largest mobile phone maker Nokia has warned that the handset sales would fall to five percent or more next year. "Fear and uncertainty are causing many suppliers and consumers to delay purchasing their next handsets," said Neil Mawston, Strategy Analytics. Fall in the demand for consumer electronics especially in Christmas season may cause to the loss of 16,000 jobs at Sony and triggers profit warning from Samsung Electronics and Texas Instruments. Forecasting a 10 percent decline in the global handset volume next year, British electronics group Laird which supplies components for Nokia and others, has announced the loss of 5,000 jobs, or nearly half its staff. "A 5-10 percent decline is the best guess at the moment," said Nordea analyst Martti Larjo. "This can move either way. If the economy continues to go downward the numbers could be worse. But while growth is not impossible, it's unlikely," he added. Emerging markets had surpassed developed markets in terms of sales volume in 2005, and this year around two third of sales are in emerging market. Mobile phone makers have had time to prepare for the market slowdown, but analysts said they were increasingly worried over the possible build-up of large inventories, just like in 2001. Geoff Blaber, Analyst, CCS Insight said, "We fear that inventories could really exacerbate problems in the first quarter." He pointed out that a number of vendors set to try and reach targets set at the start in a very different climate, which could result in a significant oversupply moving into the first quarter. According to analysts LG Electronics and Samsung Electronics are the most candidates to build-up inventories as they try to reach respective annual sales targets of 100 million and 200 million phones.