Indian smartphone and consumer electronics companies face possible production cuts and launch delays with coronavirus outbreak in China affecting component supplies. Indian manufacturers use 75 per cent Chinese components for TVs and almost 85 per cent Chinese components for smartphones. Important components such as mobile displays, open cell TV panels, open circuit boards, memory and LED chips are imported from China. Compressors for ACs and motors for washing machines are also sourced from China, The Economic Times reported.
Due to supply shortages exacerbated by factory shutdowns, Chinese vendors have increased prices of key components by 2-3 per cent. The supply shortage depends on how the situation turns out in next few days.
Increase in component prices could imply an increase in product prices in India. So far, the Novel coronavirus has led to approximately 180 deaths in China and around 6,000 confirmed cases. Industrial activity in China has come to a grinding halt after the outbreak.
"Factories in India were prepared for the usual Chinese New Year shutdown. But several cities there have extended the holiday, and companies have asked workers not to report for work for the next few days. This will likely have an impact on manufacturing in India since the extended holiday was not factored in," a senior executive at a leading smartphone brand told the daily.
According to BPL India COO Manmohan Ganesh, prices of several components could go up further if the shortage continues and this will force brands to hike prices. Xiaomi has assured India operations wouldn't be affected as the company had already planned a shutdown during New Year. Apple is working on a plan to make up for any production loss in China and is looking for alternate suppliers, according to Apple CEO Tim Cook.