Tech Bellwether Murata Sees Smartphone Market Growing This Year

(Bloomberg) -- The global smartphone market has at long last bottomed out and will recover this year, thanks to strong demand in India and other parts of Southeast Asia, according to mobile industry bellwether Murata Manufacturing Co.

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Low-priced smartphones are driving sales and the overall market will likely grow by a single-digit percentage on a unit basis both this fiscal year through March and the next, President Norio Nakajima said in an interview Tuesday.

Kyoto-based Murata, the world’s biggest maker of multilayer ceramic capacitors, supplies an array of smartphone components used by Apple Inc., Samsung Electronics Co. and Chinese manufacturers, and is seen as a leading indicator of gadget sales.

Nakajima’s optimism follows reports of continued lackluster demand in China, the world’s largest smartphone market, that have dented expectations. While Chinese consumer appetite remains weak and the market there is likely to keep shrinking, momentum in India is “promising,” the 62-year-old said.

Increased adoption of 5G and demand growth in India, which overtook China this year to become the world’s most populous country, will be key to growth, he said. Demographics indicate first-time smartphone buyers will continue to push up sales there for years to come, Nakajima said. That’s in contrast with China’s higher rates of 5G adoption, which means weaker replacement demand, he said.

The Indian market is dominated by devices running Alphabet Inc.’s Android software, though Apple’s iPhone has made inroads in recent times and Chief Executive Officer Tim Cook has made a point of expanding the company’s presence there.

India’s strategic importance in the tech supply chain has grown proportionately with rising US-China tensions. Some iPhone suppliers, such as Hon Hai Precision Industry Co., have already started production in India.

Murata has no production sites in India and has no immediate plans to build one, but the component maker will study its options there so that it can move quickly if necessary, Nakajima said. For now, Murata can ship its components to India from existing facilities located elsewhere in the region, such as Malaysia, he said.

For the current fiscal year, Murata has said it sees operating income of ¥220 billion ($1.5 billion), down 26% from the previous fiscal year.

(Updates with more details from the interview.)

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