Even as sales and manufacturing look to restart, COVID-19 impact could be here to stay for smartphone makers
- Advertisement -

Written by Shruti Dhapola
| New Delhi |

Published: April 17, 2020 7:15:20 pm

smartphones, covid-19 lockdown, covid-19, coronavirus, how is coronavirus affecting smartphone market, smartphone manufacturing, Samsung, Xiaomi, redmi, Realmi, Oppo, Vivo

Typically March and April are busy months for the Indian smartphone market. Companies like Xiaomi, Samsung, vivo, Oppo and Realme are introducing their latest devices. There is speculation on what the upcoming OnePlus phone will bring. Each week has more than its share of launches. But in 2020, all of that has changed thanks to the coronavirus pandemic.

Products which were due to launch in March such as Xiaomi’s flagship Mi 10, realme’s new Narzo series, the Vivo V19 are all delayed, though companies are now gearing up to release new phones in view of some relaxations from the Ministry of Home Affairs.

While new guidelines have allowed for sale of mobile phones via e-commerce, there is still a lot of uncertainty for smartphone companies in the country. While Samsung and Oppo refused to comment, a Xiaomi spokesperson said, “We are currently discussing the details with all our partners and evaluating. We will be able to share an update at a later stage on receiving complete clarity.”

“We are in conversations with all our stakeholders and evaluating the situation continuously keeping the wellbeing of our employees and our partners as priority,” Vivo’s Director, Brand strategy, Nipun Marya said in a statement, regarding the sales being resumed online.

For smartphone makers, the lockdown has not only impacted sales, but also production given that the manufacturing units are closed. And the bad times are likely to continue if you talk to the analysts.

Navkendar Singh, Research Director – Devices and Ecosystem at India & South Asia, IDC told indianexpress.com in an email, that the Indian market will see “potential supply chain disruptions and slower than expected consumer and enterprise demand for the next few quarters.”

IDC’s analysis shows the overall mobile phone market will decline by 20-25 per cent in 2020 for India. The feature phone market will face the brunt of this decline at nearly 35-40 per cent. In the fourth quarter of 2019, the feature phone market accounted for 30.1 million, though it was already facing a decline of 21 per cent.

The smartphone market is expected to face less of an impact, according to IDC’s analysis, at around 3-5 per cent decline. In the previous quarter, smartphone shipments stood at 36.9 million units, according to IDC’s data.

Reopening manufacturing

The revised guidelines from the Ministry of Home Affairs (MHA) have allowed for IT hardware manufacturing from April 20. The challenge will be the supply chain especially for components, according to Singh.

While companies like Xiaomi, vivo, Oppo all have manufacturing in India, a majority of the components are sourced from China. Factories in China have resumed operations, but there will be other problems given the COVID outbreak could continue for longer.

Also Read: How Coronavirus has affected smartphone supply in India and the tech world

“Restrictions and cautiousness around transportation within the country and prioritising medical equipment, essentials etc. over parts of device components will add to this shortage of components coming into India and reaching manufacturing plants. This will result in a severe supply shortage of key components required to manufacture in India and should be expected to revive not before the end of second or third quarter of 2020,” Singh said.

According to Louis Liu, Research Analyst at Singapore-based firm Canalys, while China’s leading smartphone ODM (original design manufacturers) have improved production capacity and are back to 90 per cent of capacity, the bigger problem is from the demand side given the pandemic has gone global.

“The latest data shows China export value declined 11 per cent in Q1 and there are local media reports that some ODMs relying on oversea orders have to temporarily dismiss workers to survive,” he said in an email to indianexpress.com.

Also Read: COVID-19 impact on smartphone market: February 2020 sees 14 per cent decline in sales

Xiaomi said it was hopeful that its manufacturing partners would be able to resume operations after April 20, when some restrictions will be lifted.

“Our partners are working with local authorities – at the centre and state level – in securing relevant permissions keeping in mind multiple facets of manpower, component availability, transport, etc. involved. In parallel, they are putting in place stringent measures for safety & hygiene for all their employees,” a Xiaomi spokesperson said.

The company said it was hopeful that with “manpower availability” production would ramp up gradually, though they would have to keep in mind restrictions and the safety of all engineers and operators.

Customer Demand

Still supply won’t be the only issue plaguing mobile phone manufacturers. While they might be able to fix supply chain issues eventually, the demand side of the problem is one beyond their control as the economic reality of the situation cannot be ignored.

Also Read: Poor connectivity, lack of smartphones: Online learning a challenge for teachers, students

The International Monetary Fund (IMF) has cut India’s growth rate to 1.9% for 2020. With job losses and lost income, Singh says, “discretionary spending will take a backseat resulting in decreased retail walk-ins, spends and overall revenues for the brands during the year.”

For brands this could mean longer replacement cycles, given the weaker than expected consumer demand throughout 2020. IDC notes that the India devices market will be challenged for most of 2020 and the pent-up demand from the first half of the year will gradually shift to the second half, rolling over to 2021 as well.

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest Technology News, download Indian Express App.

© IE Online Media Services Pvt Ltd

news image
#smartphonephotography
image
Read More

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here