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Benjamin Carton, Mr. Joannes Mongardini, and Yiqun Li
The enormous global demand for smartphones in recent years has created a new global tech cycle. In 2016 alone, global smartphone sales reached close to 1.5 billion, one for every fifth person on earth. In turn, this has engendered complex and evolving supply chains across Asia. We show that the new tech cycle cannot be captured by standard seasonality, but depends on smartphone product release dates. Decomposing cycle from trend, we also show that the sale of smartphones may have peaked in late 2015. Asia, however, continues to gain in importance as the global tech manufacturer.
Benjamin Carton, Mr. Joannes Mongardini, and Yiqun Li

I. Introduction The huge increase in the demand for global smartphones since 2011 has created a new global tech cycle. Demand has been driven by the increasing use of smartphones as the main computing platform across the world. It is highly cyclical as it centers around the release date of new smartphone models by global producers, including Apple Inc. and Samsung Electronics. It has also engendered highly complex and evolving supply chains across Asia. Thus, production and trade in several Asian countries have become highly correlated and intertwined with

Mr. Joannes Mongardini and Aneta Radzikowski

for smartphones saturated. This paper shows that those predications may have come true, explaining part of the recent weakness in global trade. In addition, as tech companies shift to embedded services (cloud computing, content subscription, and financial services), the contribution to global trade over the next few years could shift from merchandise exports mostly from Asia to services exports mostly from advanced economies. This is likely to reduce the volatility of the tech cycle on high- frequency trade data as services exports are likely to be smoother. The

Mr. Joannes Mongardini and Aneta Radzikowski
Global smartphone sales may have peaked. After reaching nearly 1.5 billion units in 2016, global smartphone sales have since declined, contributing negatively to world trade in 2019 and suggesting that the global market may now be saturated. This paper develops a simple model to forecast smartphone sales, which shows that sales are likely to decline further. As tech companies shift to embedded services (cloud computing, content subscriptions, and financial services), the impact on global trade may also be shifting in favor of services exports mostly from advanced economies.
Benjamin Carton, Mr. Joannes Mongardini, and Yiqun Li

Front Matter Page Research Department Contents Abstract I. Introduction II. The New Tech Cycle The Pre-Release Cycle The Post-Release Cycle III. Decomposing Trend From Cycle IV. Conclusions Tables 1. Apple Inc. and Samsung Electronics Smartphone Release Dates 2. Regression results for China Smartphone Exports 3. Regression Results for South Korea Semiconductor Exports 4. Regression results for Taiwan Province of China Electronic Export Orders Figures 1. Global Sales of PCs and Smartphones 2. The New Tech Cycle: Apple

International Monetary Fund. External Relations Dept.

number of other groups will gather ahead of the Annual Meetings, including the ministers of the Group of 24 developing countries on September 27, followed by the ministers and central bank governors of the Group of 10 industrial countries. On September 29, E. Gerald Corrigan—Managing Director of the Goldman Sachs Group, Inc., and former president of the Federal Reserve Bank of New York—will deliver the Per Jacobsson Foundation lecture, “The Boom-Bust High-Tech Cycle: Lessons Learned.”

International Monetary Fund. Asia and Pacific Dept

-China trade tensions and a global slowdown in the tech cycle, especially for semi-conductors which account for about 21 percent (customs clearance basis in 2018) of Korea’s exports, has dampened both exports and facility investment. Along these trends, compounded by base effects in government investment, growth in Q1 of 2019 unexpectedly dipped 0.3 percent (Q on Q). The temporary drop in government investment was mainly driven by slow budget execution in Q1 this year due to delays in bidding and contracting, compared to the large increase in government spending in Q4 of

International Monetary Fund. Asia and Pacific Dept

surplus is estimated to have increased by 0.4 percentage point compared to 2017, to 2.9 percent of GDP. The BOK increased its main policy rate by 25 basis points to 1.75 percent in November 2018 and has been on hold since. Growth is projected to slide to around 2.6 percent in 2019. This slowdown is driven by an expected deterioration in external demand, while internal demand is anticipated to pick up, supported by fiscal policy. Export growth is projected to be weak reflecting a deteriorating tech cycle, and a slowdown in demand from China. Domestic consumption is

International Monetary Fund. Research Dept.

involved in the tech cycle (China, Korea, Malaysia, Singapore, Taiwan Province of China), total exports grew by 6.7 percent in 2017. Even though tech exports accounted for less than 10 percent of total exports in the region, smartphone-related exports contributed about one-third the growth rate of total exports. Ireland, Korea, and Taiwan Province of China are estimated to be the main beneficiaries of the new tech cycle in value-added terms. In Ireland, where the intellectual property of Apple Inc. resides, staff estimate the contribution in value-added terms of iPhone