A slowing market for tablets and smartphones is starting to cause ripples across the tech industry as buyers may be moving money back into PCs and memory vendors are taking a few hits.
At a high level, tech vendors are facing turbulence as smartphone growth is expected to slow this year and tablet sales stall. The whipping boy for these mobile devices---PCs---are expected to benefit.
Consider the following:
- IDC is projecting smartphone unit growth of 12.2 percent in 2015 with a compound annual growth rate of 9.8 percent from 2014 to 2018. Revenue growth will be 4.2 percent on a compound rate from 2014 to 2018 as mobile device makers kill each other on price.
- The global tablet market will grow 7.2 percent in 2014, down from 52.5 percent in 2013, according to IDC.
- Gartner said that global PC shipments grew 1 percent in the fourth quarter largely because the tablet-as-PC-replacement theme peaked in 2013 and the first half of 2014. "Now that tablets have mostly penetrated some key markets, consumer spending is slowly shifting back to PCs," said Mikako Kitagawa, an analyst at Gartner.
This slowdown in mobile device growth is starting to turn up in the supply chain. Samsung struggled with smartphone sales in 2014 and to keep the overall business humming it is going with its own chip unit for its mobile memory needs. That move is creating a glut in the NAND market.
And that glut---which memory makers argue is temporary---is squeezing Sandisk and Micron Technology. Sandisk issued a sales warning for its most recent quarter and cited retail and mobile embedded memory weakness.
Stifel analyst Kevin Cassidy said that a handset slowdown for Samsung and a few Chinese device makers weren't offset by iPhone sales strength from Apple. In the end, Sandisk took its lumps and will now most likely boost its enterprise efforts.
BMO analyst Ambrish Srivastava said Sandisk's issues "could be a result of Samsung moving more to internal supply for its handset division."
As for Micron Technology, CEO Mark Durcan said January 6 that the company has to play in the mobile market, but will also diversify in the enterprise as well as SSDs.
The slowing mobile device landscape is likely to be a common theme as technology companies report earnings. PC-related vendors may do recover a bit as dominant mobile suppliers sweat. In the end, the dominant theme is that there are too many screens---slabs with little differentiation---and not enough gadget lust to entice technology buyers.