Foxconn iPhone Assembly Base Zhengzhou"Closed management",Supply and demand at the mobile phone market"Epicenter

Wuhan epidemic spread, More and more cities announce "Closed management". On February 4th, Foxconn's Apple iPhone assembly base, Zhengzhou, directly announced entry" Totally closed management", Immediately after, TSMC's 12-inch factory base in mainland China in Nanjing has also joined" Totally closed management" Among, the market is watching the impact of this epidemic in the electronics industry.

Foxconn, Large tech companies like TSMC are hit by this menacing epidemic, All Lipin factories resumed work as scheduled. Foxconn states, Maintain the target of resumption of work on February 10, Local governments' epidemic prevention work also helps the group resume production line operations.

The market view is that the date of Fuji, rehabilitation workers remain unchanged, But employees should not be able to return to work, Traffic problems due to closed or semi-closed cities, Factors such as employee isolation/autonomous isolation, estimated to return up to 70% of employees, compared with previous years, the proportion of employees returning to their posts after the Spring Festival are 80 ~ 90%.

Further, the industry also pointed out, Local government strategy is to resume work after February 10, But one of the conditions for the return to work, It is required that enterprises must prepare adequate protective equipment.

Zhengzhou plant produces 500,000 iPhones per day

Logistics is also a big challenge, More and more cities are equivalent to semi-closed cities "Closed management", The future will cause difficulties in the transport and circulation of goods, Although not "Broken link", But short of staff, Transportation difficulties for subsequent supply, Worth close observation.

Foxconn's factory in Zhengzhou, Henan, Is the global production center of Apple iPhone, About 50% of global iPhone production, It is estimated that Zhengzhou plant has a total of 94 production lines, Approx. 350 iPhones can be assembled per minute, 500,000 iPhones assembled per day.

Foxconn's factory in Zhengzhou, Hongfujin Precision Electronics Zhengzhou Company including Zhengzhou Xinzheng Free Trade Zone, Is the headquarters of Foxconn in Zhengzhou. In addition, there is also a Fortune Precision Electronics Zhengzhou company in the Zhengzhou Export Processing Zone, Economic Development Division; Further, Fuding Precision Electronics Zhengzhou Co., Ltd., Baisha Town, Zhongmu, Foxconn Zhongmu County Branch.

Zhengzhou announced a few days ago "Closed management" Rear, Although Hon Hai announced that it will resume work on February 10 as scheduled, But the market expects future employees to return to work, Logistics conditions will also be affected, To fully return to normal, at least close to the end of February, therefore, Impact on iPhone, shipments may expand.

Demand cooling shock better than the broken chain crisis

Compared to supply-side challenges, All sectors are more worried about shrinking demand, Especially the cooling demand in the first quarter of 2020, And fewer working days at major companies (Because of the delay in resuming work, Logistics impact, etc.) Reduced revenue, Doomed for the first quarter of 2020.

And the SARS epidemic in 2003, The impact of Wuhan pneumonia on the electronics industry may be greater this time.

From the perspective of digestion of semiconductor components, Asia Pacific accounted for only about 38% of global semiconductor components in 2003, But by 2019, The proportion has climbed to 62%, This also includes the global supply chain of electronic products is concentrated in Asia.

Most affected should be the mobile phone industry. Research institutions point out, Because of this epidemic, Global smartphone shipments to decrease by at least 2% in 2020, Conservative estimate, China's mobile phone market shipments will be at least 5% lower than expected, this assumption is based on the fact that the epidemic can be effectively controlled before the end of the first season.

In addition, Marketing speed and expansion speed of domestic brand mobile phone manufacturers in overseas markets may also slow down due to the epidemic, mainly because at least the end of the first quarter of 2020, There will be restrictions on flights and travel, there are also some foreign businessmen who try to minimize employees' business trips to China.

Extension of some international exhibitions may be cancelled Like SEMICON Korea announced in mid-February, SEMICON China in mid-March announced an extension.

Overall, Industry Outlook for the Mobile Phone Market in the First Half of 2020, Because of the Wuhan epidemic, will become very conservative.

Tianfeng International pointed out, During the Spring Festival 2020, YoY decline in mobile phone shipments in the Chinese market is as high as 50-60%,As a result, there are about 50-60 million high-water levels in the current channel.

Compared with China's mobile phone shipments of about 360 million to 380 million in 2019, Now down to 310 million to 330 million units, an Annual decline rate of about 15%.

Further, Chinese Android brand's top priority is to destock, If inventory control goes well, Expected by the end of the second quarter to the third quarter of 2020, Stocks can drop to normal levels, However, the process of destocking will be unfavorable for new machine shipments and related industry chains.

In addition to the impact of Wuhan pneumonia epidemic, the appeal of 5G mobile phones is not enough to stimulate the demand for replacement.

Impact of this part on-chip the industry will be reflected in the shipping target,5G chips may not be able to load, the worst case is that the demand for 4G chips is also affected.

Semiconductors are not labor-intensive, Affected less than assembly industry

This epidemic severely impacted consumer buying, and to some extent affect the supply situation of downstream plants. By comparison, Impact on upstream chip industry, No serious downstream assembly foundries.

Many cities are almost closed, How much will affect the situation of return to work, however, Semiconductors are not labor-intensive industries, But the assembly industry relies heavily on manpower, Only Taiwan Semiconductor Manufacturing Co., Ltd. has about 50,000 employees worldwide, Difference of about one million people worldwide compared to Hon Hai, You can see one or two.

Further, On the chip industry chain, China accounts for only 15% of global semiconductor capacity.

The proportion of wafer fabs in Wuhan is not high, at present, the main wafer fab in Wuhan is only Wuhan Xinxin, which produces NOR Flash chips and CIS chips., And Yangtze River Storage, which is about to start mass production of 3D NAND chips. Other Chinese storage fabs include Hefei Changxin Storage and Fujian Jinhua, currently operating as usual.

Foundries such as SMIC also emphasize 365 days a year,24 hours’ factory production normally, and quickly set up a special working group to organize epidemic prevention and control work before the festival., Effective self-immunization for employees during holidays, and arrange for employees to return to work postponed, Encourage the implementation of remote offices.

Huahong Group also pointed out, before the Spring Festival holiday, the company's management and the relevant departments will form an emergency management team for epidemic prevention and control, Established regulations for personnel entering the factory area during the epidemic prevention and control, Further strengthen environmental safety, Food safety, etc., Effectively manage and control personnel, Body temperature test, Site disinfection and other specific matters for epidemic prevention and control.

TSMC has 12-inch factory in Nanjing, 8-inch factory in Shanghai Songjiang, Although Nanjing entered "Closed management" stage, but it is understood, Resumption of work as scheduled.

Further, Nanjing and Shanghai Songjiang plants account for only about 5% of TSMC's overall capacity. In addition, UMC's Suzhou Hejian 8 inch, Xiamen Lianxin 12-inch factory total, It also accounts for only about 15% of UMC's overall production capacity.