[SMM analysis] the epidemic affects the normalization of telecommuting and online education and the demand for lithium cobalt oxide.

SMM5 March 28:

During the epidemic, telecommuting and online education at home and abroad have gradually become normal, and consumers' demand for tablet computers has increased. However, the resumption of work in battery factories and flat plate factories has been delayed, and the production of flat plate factories is in short supply. According to SMM customer feedback, the demand for lithium cobalt batteries and lithium cobalt materials for downstream tablets from March to April is higher than before.

Facebook CEO Zuckerberg recently said in a public video that the proportion of telecommuters will be significantly increased over the next five to 10 years, allowing 50% of the existing 45000 employees to work from home for a long time, according to the Wall Street Journal. Twitter, a social networking site, said on May 12th that even if the epidemic was over, the company would allow employees to continue to work from home for a long time (except for equipment maintenance personnel). As a result, Twitter became the first Silicon Valley technology company to use "telecommuting" as a permanent option.

The delay in the opening of schools at all levels in China and the vigorous development of online teaching called by the Ministry of Education will drive the purchase demand of teachers or parents for tablets. Compared with the mobile phone, the tablet has a larger screen, better vision protection, easier to use and better price advantage than the PC. More importantly, parents are becoming more and more receptive to online education, and the habit of parents signing up for tutoring classes will be changed in the future. With the shift from offline education to online education, the vigorous development of online education will be good for the growth of tablets.

According to the latest report released by IDC, the Chinese tablet market shipped about 3.73 million units in the first quarter of 2020, down 29.8% from the same period last year due to the epidemic. Generally speaking, the first quarter is the quarter with the least tablet shipments of the year, and the outbreak has delayed the resumption of work at factories, and the shortage of workers has significantly affected the supply of spare parts and production of products. The resumption of work in battery factories and flat panel factories was delayed, and the production of flat panel factories fell short of supply in the first quarter.

In terms of products, shipments of, Slate Tablet (traditional straight-board tablets) were about 1.67 million in the first quarter of this year, down 63.3% from a year earlier, down about 2.06 million units from a year earlier, a sharp increase of 168.2% over the same period last year.

From the perspective of manufacturers, Huawei still ranked first, with shipments of about 1.5 million units, accounting for 40.2% of the market share, an increase of 4.3% over the same period last year. It is worth mentioning that under the influence of the epidemic, other manufacturers generally shut down and led to a decrease in shipments, only Huawei bucked the trend. Apple ranked second with a market share of 35.1%, shipping 1.31 million units, a sharp decrease of 42.5% compared with the same period last year. Xiaomi ranked third, with about 210000 units shipped, with a market share of 5.5 per cent, while Microsoft and Lenovo occupied fourth and fifth positions with 3.2 per cent and 1.7 per cent market share, respectively.

From a channel-by-channel point of view, IDC data show that offline channel shipments in China's tablet computer market accounted for more than 50% in 2019. Affected by the epidemic this year, consumers with purchasing demand can only choose to buy online, so the share of online channels will increase significantly in the first quarter of 2020. During the epidemic period, the inventory turnover cycle of offline channels was shortened from 8 weeks to 4 weeks, and the pressure capacity of the channels decreased significantly. Manufacturers must help channels restore confidence in a timely manner and increase rebate incentives.

SMM believes that the epidemic at home and abroad is not over, telecommuting and online education are becoming more and more normal, consumer demand for tablet computers is increasing, and demand for lithium cobalt batteries and materials may increase. In the commercial market, some enterprises increase the purchase demand for tablets and other computers in order to support their employees' telecommuting; in the consumer market, although the epidemic affects consumers' consumer psychology more cautiously, and the number of upgrades may decrease, however, due to the increase in online education for students, the new demand for tablets may increase slightly. According to feedback from SMM customers, except for the demand for new mobile phones and the e-cigarette market for US orders, the other increments mainly come from the tablet computer market, and digital exports also increased in April. Lithium cobalt orders decreased month-on-month this month, entering the off-season. A lithium cobalt manufacturer at a battery factory that has long supplied tablets and laptops said there was no significant decrease in purchase orders for lithium cobalt this month compared with April.

SMM Cobalt Lithium New Energy Research team

Lin Fangwen 021Mui 51666878

Qin Jingjing 021 Murray 51666828

Mei Wang Qin 021 Mui 51666759

Huo Yuan 021 Murray 51666898

Wu Yang 021 51666818