Can Apple and Samsung Keep Up with the Growing Smartphone Demand?

The demand for smartphones and tablets is expected to "increase drastically" during the third quarter, potentially causing problems for the panel supply chain. According to DigiTimes, the demand increase will begin during August and continue through September. More than one billion cellular phones are shipped annually. This year, 400 million of them are expected to be smartphone. The increase is being attributed to the rising Chinese market. Chinese consumers are not waiting until August to buy their next cellular device, however. DigiTimes' sources believe that both tablet and smartphone sales will increase in July as well. October could also prove to be another significant month for smartphone sales in China. If demand continues to increase, it could put a serious strain on panel suppliers. As of this writing, the supply crunch is expected to last until the first half of 2014. These expectations are based on products that are already available or could be available before the end of the year. They do not take into account the possibility that Apple AAPL, Samsung SSNLF or Google GOOG may release a new (perhaps unexpected) device that could change the sales landscape. In addition to the game console that Google is rumored to be developing, the search engine giant is also said to be working on a smart watch to combat Sony SNE, Apple and other manufacturers who might release a similar product. While a game console is unlikely to affect smartphone sales one way or other, a smart watch could greatly impact the market. Right now, all existing smart watches, including Sony's own SmartWatch 2, lack the ability to surf the Web, run high-end apps and make phone calls independently. In fact, Sony's device was built specifically for users who own an Android phone. If and when that changes, consumers could shift their attention from smartphones to smart watches -- just as they have shifted from notebooks to tablets. Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ