Slowing smartphone-market growth, seasonality and inventory fluctuations

「Displays for LCD smartphones, which the company had been strategically scaling back in preparation for withdrawal, declined to an extremely low level.」

「As a result, revenue for the fiscal year was ¥188,012 million, down ¥51,140 million, or 21.4%, year on year, due to the strategic withdrawal from LCD smartphones and declining demand in areas such as smartwatches and VR.」

「Revenue from liquid-crystal smartphones, a non-core business, during the six-month consolidated accounting period was ¥7,804 million, down 53.3% year on year. Its share of total revenue declined to 7.6% from 13.9% in the same period of the previous year.」

「This field is positioned as a non-core business. Sales for the fiscal year were ¥32,414 million, down 57.2% from the previous fiscal year, and its share of total sales fell to 13.6% from 28.0%.」

「Sales in the LCD smartphone segment for the cumulative third quarter were ¥25,502 million, down 57.7% year on year. Its share of total sales fell from 29.0% in the same period of the previous year to 14.1%.」

「Sales in the LCD smartphone segment, including LCD displays for smartphones and tablets, during the cumulative second quarter of the consolidated fiscal year were ¥16,703 million, down 56.0% year on year. Its share of total sales fell from 27.5% in the same period of the previous year to 13.9%.」

「Revenue in the mobile segment for the first quarter was ¥8,062 million, down 48.7% year on year. Its share of total revenue declined to 15.2% from 27.5% in the same period of the previous year.」

「In this sector, revenue declined substantially year on year due to lower demand accompanying the global decline in smartphone shipments, the continued downward trend in demand for LCD displays for major US customers, and the company's strategic scaling back of its smartphone display business.」

「Sales in the mobile segment, including displays for smartphones and tablets, were ¥60,301 million, down 31.5% year on year. The segment’s share of total sales fell to 29.0% from 42.0% in the same period of the previous year.」

「In Europe and the United States, revenue in this field declined as the trend of falling LCD demand continued, reflecting major customers’ shift to OLED smartphone displays. Revenue in China and other markets also declined because smartphone sales fell as a result of lockdowns and movement restrictions in China, and smartphone manufacturers adjusted their inventories.」

「Demand from major customers in this field had continued to trend significantly below the previous year's level, but although short-term fluctuations are expected, demand is expected to follow a gradual downward trend over the medium term.」

「Sales to Europe and North America fell sharply due to wider adoption of OLED displays by major customers, declining 47.5% year on year to ¥88,033 million. Their share of total sales fell from 61.6% in the same period of the previous year to 42.0%.」

「Demand from major customers in this field had continued to trend significantly below the previous year's level, but although short-term fluctuations are expected, demand is expected to follow a gradual downward trend over the medium term.」

「Revenue in the mobile segment decreased 51.2% year on year to ¥30,107 million. Its share of total revenue fell to 45.6%.」

「Sales during the cumulative period declined 38.2% year on year due to lower orders as major smartphone manufacturers, the Company's key customers, expanded their adoption of OLED. In addition to the maturity of the smartphone market, changes in customer needs and intensifying competition in the smartphone display market mean that the outlook for a significant recovery in the Group's sales in this segment is extremely low.」

「In the second quarter, demand that had declined due to the impact of COVID-19 showed improvement across the business fields, but had not recovered to the level of the cumulative period of the same quarter of the previous year.」

「This level was below the initial forecast, partly because demand declined as a result of the COVID-19 pandemic.」

「In addition, during the fourth-quarter consolidated accounting period, hereinafter the “fourth quarter,” global supply chains stagnated and personal consumption fell sharply due to the spread of COVID-19.」

「Revenue declined year on year because the significant increase in demand for new smartphone products seen in the third quarter of the previous fiscal year did not recur in the current fiscal year, and because operations at the Hakusan Plant, which produced smartphone displays, were suspended, among other factors.」

「Against this backdrop, sales in this field declined both year on year and from the previous quarter during the accounting period, partly because of the impact of US-China trade friction and customer inventory adjustments.」

「During the fiscal year under review, shipments of display products remained sluggish in the small- and medium-sized display industry. Global market growth slowed in the smartphone market, the industry's main application, due to the slowdown in the Chinese economy, which had driven growth, and longer replacement cycles, among other factors.」

「However, the market as a whole stagnated due to factors including the economic slowdown in China and longer smartphone life cycles, resulting in a greater-than-expected impact on demand for the Group's displays from major customers.」

「In the small- and medium-sized display industry during the cumulative period of the second quarter, the competitive environment remained difficult against a backdrop of expanded production capacity among overseas display manufacturers, greater adoption of OLED displays by customers, and stagnant display demand due to slowing growth in the smartphone market.」

「In the global smartphone market, which accounts for more than half of worldwide demand for small- and medium-sized displays, sales showed signs of stagnation amid a global slowdown in growth due to factors including rising smartphone penetration and longer replacement cycles, affecting demand for displays.」

「In the smartphone market, global market growth slowed, partly due to rising penetration rates and longer replacement cycles, which also affected growth in the small- and medium-sized display industry.」

「In addition, changes in trends in the medium- and small-sized display market were observed, including reports of slowing sales volumes in China, the world’s largest smartphone market.」

「Sales to China declined from the same cumulative period of the previous year, as smartphone manufacturers adjusted inventories and customers entered a transitional period of assessing market direction amid changes in trends in smartphone display design.」

「Compared with the same quarter of the previous year, group sales increased because sales to China and other parts of Asia outside China increased in the core mobile segment. Compared with the previous quarter, however, sales declined due to seasonal factors and the impact of inventory adjustments in China.」

「Although the smartphone market continues to grow, the pace of growth has slowed due partly to a slowdown in China, which had driven market growth.」

「In the small- and medium-sized display market during the 9-month period of the current consolidated fiscal year, the market remained firm, particularly for smartphone displays.」

「Although growth continued in displays for smartphones, the growth rate moderated as smartphones became more widely adopted worldwide.」

「Sales in Europe and the Americas remained weak due to declining demand and changes in customers’ product mixes, among other factors.」

「Despite efforts through the end of the period, the sharp decline in revenue due to the impact of customers' inventory reductions during the fourth quarter consolidated accounting period resulted in a net loss for the fiscal year.」