(Bloomberg) -- Murata Manufacturing Co. expects this year’s drop in smartphone sales to keep going well into 2023, led by a sharp downturn in China.

Most Read from Bloomberg

• Adidas Cuts Ties With Ye, Absorbing €250 Million Profit Hit

• Renters Hit Breaking Point in a Sudden Reversal for Landlords

• China Stocks Slide as Leadership Overhaul Disappoints Traders

• California Poised to Overtake Germany as World’s No. 4 Economy

The company’s outlook has dimmed dramatically from a quarter ago, when it looked forward to a bounceback in Chinese demand after the end of Covid-19 lockdowns in major cities. Consumers in the world’s biggest smartphone market haven’t responded with a spending spree and Murata sees little prospect for a rally over the next year, President Norio Nakajima told Bloomberg News in an interview.

“The momentum will not come back at least during fiscal 2022 and the situation is not that positive going into the next term,” Nakajima said. “Demand for consumer electronics has dropped drastically and these Chinese makers are not feeling well.”

Kyoto-based Murata is a linchpin of the smartphone industry, providing electronic modules and components for Apple Inc.’s iPhones, Samsung Electronics Co.’s Android devices and China’s leading device makers. Its shares have slumped more than 20% this year as key customers have weathered double-digit declines in shipments, especially in China.

“Consumers might have been willing to buy new phones even with small upgrades if the economy were in a better shape,” Nakajima said, pointing to interest rate hikes by central banks around the world as a big factor. “What I’m afraid will happen is smartphones get further commoditized and people will wait even longer before upgrading.”

Read more: Global Smartphone Demand Continues Fall as Economic Woes Hit

The global handset market was 1.36 billion units last fiscal year, according to Murata estimates, but the figure for the current term is likely to fall short of 1.2 billion, Nakajima said. The biggest downside risk is a further slump in overseas sales for Chinese firms.

“Chinese makers pushed hard to sell outside their home turf, but due to various issues including intellectual property infringements, consumers like those in India began to avoid Chinese phones,” he said.

One silver lining seen by Murata’s president is sustained demand for high-end phones even during the economic downturn. The weakened yen, which now approaches 150 yen to a US dollar, is also helping prop up the company’s bottom line as 65% of its production is done in Japan but more than 90% of sales are made overseas.