[SMM Analysis] what will be the future demand for lithium batteries in the technology market?

SMM1, March 3 / PRNewswire-Asianet /-recently, a piece of news about Apple detonated the US stock market in 2019. it was reported that Apple unexpectedly announced after the first trading day of 2019 (Wednesday). The revenue guidance for the first quarter of fiscal year 2019 (that is, the fourth quarter of 2018 natural year) and the gross profit margin forecast were downgraded. As soon as the news came out, Apple's South Korean suppliers were dragged down by, LG Innotek, SK Hynix, Samsung SDI, and Samsung Motor. Among them, LG Innotek and SK Hercules fell nearly 4 per cent at one point. A-share concept stocks have also been greatly affected; in A-share trading, Dongshan Precision flash limit, Xinwei Communications fell nearly 5%, Lixun Precision fell 4%, Xinwangda fell more than 2%, Ofie Technology, Huanxu Electronics fell nearly 2%. Concept stocks related to Hong Kong stocks also fell.

In response, SMM believes that the gradual saturation of the high-end mobile phone market and the progress of mobile phone upgrading is lower than expected, which will reduce the demand for lithium cobalt acid batteries. Global demand for lithium cobalt batteries in consumer electronics was 32.6 GWhs in 2018, down 2 per cent from a year earlier to 31.92GWh in 2019. Although the high-end mobile phone market is still underperforming, thanks to the growth of other new electronic devices, demand for lithium cobalt batteries will rise 2.6 per cent year-on-year in 2020, with total demand reaching 32.76GWh for the whole year.

According to Wall Street reports, Apple focused on emerging markets and the challenges posed by its main business, the iPhone phone. The letter said Apple had mistakenly underestimated the extent of the slowdown in some core emerging markets, in particular poor demand for iPhone phones in Greater China, which, along with other EM markets, contributed to "most of the year-on-year decline in mobile phone revenues". At the same time, in some developed countries, mobile phone upgrades are not as strong as expected: "the macroeconomic challenge is at the heart of some markets' poor performance, and there are other factors that are widely affecting the performance of the iPhone mobile phone business. For example, fewer telecom operators subsidize consumer switching, a stronger dollar leads some countries to pay more for iPhone in their own currencies, and some consumers take advantage of Apple's significantly lower replacement prices for older phone batteries. "

Of course, the early warning letter also talked about Q1 Apple's praiseworthy performance in fiscal 2019. For example, in addition to the poor performance of the iPhone product line, overall revenue rose 19 per cent year-on-year in services, Mac computers, iPad tablets and wearable / smart home / accessories. The number of active installed devices has reached an all-time high and has increased by more than 100 million in the past 12 months, and the number of Apple devices used is the highest in history, becoming a benchmark for testing customers' continued loyalty, satisfaction and participation.

Apple is expected to have record service revenue, wearable revenue and Mac computer revenue, the letter said. Among them, quarterly service revenue is expected to rise to $10.8 billion and reach a quarterly record high in each geographical region, basically achieving the goal of doubling the company's service revenue between 2016 and 2020. The Apple Watch and AirPods wireless headphones pushed wearables up 50% from a year earlier, while revenue from the Mac computer business, where sales were down at one point, rose from a year earlier. The new iPad Pro drives double-digit revenue growth for tablets: "We expect companies to record revenues in advanced economies such as the United States, Canada, Germany, Italy, Spain, the Netherlands and South Korea;" Mexico, Poland, Malaysia and Vietnam will record the highest revenues in the EM market; Apple's EPS (earnings per share) will reach record highs. The company's earnings and cash flow generation capacity is strong, and net cash holdings are expected to be $130 billion at the end of the quarter. "