Chinese telecom carriers’ strategies to end subsidies to smartphone...
Chinese telecom carriers’ strategies to end subsidies to smartphone makers has meant a falloff of smartphone demand after a peak in March and April, said an NPD DisplaySearch report released Wednesday (http://bit.ly/1E0cKdR). Telecom carriers in China will gradually stop subsidizing smartphones directly to focus more on consumer call charges, DisplaySearch said, which is expected to affect current inventory levels of name brands. The change in strategy could affect the supply chain, adding to declining smartphone display average selling prices (ASPs) in the open market, DisplaySearch said. The average price of a 5-inch 720p in-plane switching module was $25 in August 2013 and dropped 44 percent to $14 this August, said DisplaySearch, which could lead to “weaker-than-usual” sales growth in second half 2014. “An adequate supply” of mobile phone displays will result in falling ASPs through the rest of the year, said Terry Yu, analyst. Coolpad, which has strong relationships with Chinese telecom carriers, already suffered from inventory issues that forced the company to implement a new distribution strategy in September, Yu said. Coolpad plans to launch three distinct brands to lessen the impact of subsidy adjustments: one each for telecom carriers’ channels, traditional distribution and e-commerce, Yu said. The iPhone 6’s arrival in China in a few weeks, however, is expected to improve display procurement demand and ASP performance, he said.