India’s smartphone sector, the second-largest in the world, could be headed to a supply-chain disruption as a result of the coronavirus epidemic. Chinese smartphone makers, it is learnt, could be severely impacted if the situation triggered by the spread of COVID-19 does not improve.
“Smartphone vendors will feel the impact and new launches will get delayed till mid Q2,” explained Navkendar Singh, Research Director, Client Devices & IPDS, at IDC India. “Component stocks will also feel impact due to logistics issues till mid Q2.”
Even though most Chinese companies such as Xiaomi, Vivo and Oppo assemble smartphones in India, they heavily rely on China for many of the key components like battery and sensors. The delay in sourcing electronic components from China means supply chain disruptions, leading to a delay in manufacturing and launches.
A Xiaomi India spokesperson told indianexpress.com that the extended shutdown in China will likely have an impact on the company’s supply chain and “overall quantum of component supplies” is under risk. Xiaomi, India’s largest smartphone vendor, admits that several components and raw materials are in short supply and this has put a “negative pressure” on their prices. As a result, the company had to increase the price of the Redmi Note 8 (4GB + 64GB) variant in India. However, Xiaomi assured that the price rise is temporary and the company is trying to explore alternative supply channels for components and raw materials.
The mobile handsets and electronics industry body, India Cellular and Electronics Association (ICEA), is monitoring the situation closely. “The coming weeks are crucial for the smartphone industry and if factories do not resume then there could be an impact on the manufacturing of mobile phones in India as vendors are heavily dependent on the Chinese supply chain ecosystem,” said Pankaj Mohindroo, ICEA chairman. Mohindroo said the prices of smartphones might see a marginal increase for some “scattered categories”.
Realme, a major smartphone player in India, indicated that there might be some supply delays from China but this will not have any impact on its “business plans” or “product pricing”. “Our supply chain has not been affected for the time being,” a company spokesperson said.
An analyst, who wished to remain anonymous, told indianexpress.com that the vendors seem to have enough “cushion” for now. He, however, did acknowledge that if the situation does not change in the coming days there might be a negative impact on smartphone vendors in the second quarter of 2020.
Vivo, the second-largest smartphone vendor in India by volumes, said the company is making sure there is enough stock of most models available in the market. “Through proper planning of our supplies we are trying to avoid the situation where retailers need to hoard the supplies of our phones,” a Vivo India spokesperson said in a statement.
Despite the pressures, Chinese vendors have said a price hike was unlikely in the short run. “We are fully equipped to meet demand locally and therefore, do not have any plans for a hike in prices,” a Realme India spokesperson said. HMD Global, the company behind Nokia-branded phones, too said there was no plan for a price hike.
A senior executive of a renowned retail chain said the supply of iPhone 11 and iPhone 11 Pro are constrained in India. “For the past two to three weeks, we have not got fresh supplies of iPhones.” But the retailer said it had enough stocks of iPhone 11 and iPhone 11 Pro to meet the demand. Apple makes most of its high-end iPhones and other products in China.
Analysts say most vendors have enough supplies for the month of March. However, the true impact of coronavirus will be visible when manufacturers starting running low on components. “Hopefully manufacturing should ramp up substantially by March-end, but supply chain and logistics will have a long-lasting impact,” warned Singh of IDC. This, he said, could also prompt companies to look at creating a backup for China.
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COVID-19, the novel coronavirus that originated in Wuhan, China, continues to spread across the globe, including India. As of Saturday morning, around 102,225 people across 58 countries have been infected, while the death toll has risen to 3495
Last month, the world’s biggest mobile tradeshow — the Mobile World Congress in Barcelona — had to be cancelled after most of the top smartphone companies and telecom gear makers decided to back out over coronavirus concerns. Meanwhile, Apple had told investors that the coronavirus outbreak is severely affecting the production of iPhones.
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