The Next Casualty of China’s Decline? Asian Parts Suppliers

Asian electronic-parts suppliers relied on consumer demand and manufacturing muscle to power growth in recent years

Wall Street Journal

 Sept. 1, 2015—The combined effects of China’s economic slowdown, a maturing smartphone industry and market volatility are sending jitters through Asian electronic-parts suppliers, which have relied on Chinese consumer demand and manufacturing muscle to power their growth in recent years.

After several years of torrid expansion, smartphone sales are slowing in China, and stocks of unsold handsets are mounting in stores and warehouses. World-wide sales of smartphones grew at their slowest rate since 2013, research firm Gartner said this month, with sales in China falling for the first time in the second quarter.

The slowdown in smartphone sales is expected to hit Asian semiconductor giants such as Samsung Electronics Co. and SK Hynix Inc., whose memory chips are widely used to store data in the devices. Some Japanese electronics suppliers that operate further up the industry’s supply chain—like Fanuc Corp., a maker of industrial robots and machine tools used by smartphone makers, and Tokyo Electron Ltd., a provider of chip-making equipment—recently lowered their forecasts for sales and earnings in the fiscal year ending next March.

“I don’t think this is a bust, but we’re going to have to work through the slowdown,” said Amir Anvarzadeh, Japan equity strategist at BGC Partners. “Inventories will have to come down.”

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