KYOTO -- Orders at six leading Japanese manufacturers of electronic components grew just 8% for the first three months of the year, marking the slowest growth in five quarters amid lackluster demand for the iPhone X and other high-end smartphones.
Murata Manufacturing, TDK, Kyocera, Nidec, Alps Electric and Nitto Denko landed 1.43 trillion yen ($13.1 billion) worth of orders during the January-March quarter, according to data collected by Nikkei. This translates to the first single-digit growth since October-December 2016.
At that time, orders were rebounding in the wake of 2015 slump in the mobile phone market. The quarterly increase in orders then hovered around 15% with the spread of feature-rich handsets. The Japanese suppliers booked record orders for the last two quarters of 2017.
But now, even the new high-end models are starting to hit a snag. Apple has cut back production of the iPhone X since the start of the year, and informed its parts suppliers that sales have undershot projections. Flagship products at Chinese smartphone makers ran out of steam after the effects of sales incentives ran their course.
Alps is strong in lens actuators for cameras, yet parts orders were flat compared with a year earlier as demand from smartphone manufacturers slowed. And orders at Murata, which controls a 40%-50% global share in smartphone communication components, effectively grew only about 10% once the battery business acquired from Sony last year is factored out.
Nitto Denko's orders have apparently declined by roughly 10%. Polarizing plates, film and other screen components took a hit from the latest iPhones' poor showing, with the figures also reflecting a retrenchment following the rush of orders at the end of last year.
Orders at the six companies for the full fiscal year through March totaled around 5.94 trillion yen, a new record. Although growth has weakened, demand from electric vehicles, self-driving technology and other automotive applications kept the numbers afloat.
The automobile sector is becoming the main driver of electronic components, making up for the shortfall caused by mobile devices. Murata is expanding capacity at a factory in Shimane Prefecture, investing up to 100 billion yen through fiscal 2019 on capacitors for such applications as electric vehicles.
"Each vehicle is doubling or tripling the number of capacitors used to numbers approaching 10,000," said Toru Inoue, a senior executive vice president at Murata.
TDK also plans to boost production of power supply parts for automobiles by 20% at sites at home and abroad.
But component orders are likely to be flat for this quarter and after. Auto industry orders have a good chance of staying strong for the short term. Many observers are looking to the period starting this summer, when orders stemming from new smartphone releases usually pick up speed.