Asian electronic-parts suppliers who have long relied on the Chinese economy are wary of the effects of the latter’s slowdown, according to a report by the Wall Street Journal.
Smartphone sales are gradually slowing in China as stocks of unsold handsets are increasing in stores and warehouses.
Some of the companies that are anticipated to be hit by the decrease in sales are Samsung Electronics Co. and SK Hynix Inc., whose memory chips are widely used to supplement functionality in the devices.
As a result of the bleak situation of the market, some companies, such as Fanuc Corp. and Tokyo Electron Ltd., have 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.
Chinese handset maker Lenovo Group Ltd., which has remained competitive in the global smartphone rankings, has already reported earnings in the latest quarter way below its preferred targets.
"Overall, the component makers' situation is getting tougher than two months ago, but premium suppliers will be okay," said Shoji Sato, an analyst at Morgan Stanley MUFG.
For other companies unfazed by the unfavorable economic conditions, the goal is to maintain production efficiency and Sony Corp., which supplies image sensors for digital cameras, is no different.
The company stated in April that during the current fiscal year, it will invest 210 billion yuan ($1.73 billion) to expand output of image sensors and 80 billion yuan to lift production of camera modules.
The company is exerting its best effort to keep up with the demand amid the economic slowdown.
According to a Sony official, the recent economic downturn has no immediate impact on their business and that they are struggling to supply enough image sensors for customers in China.