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Coronavirus impact: So far so good for smartphone industry

Coronavirus news: Over the last month and a half, there have been many new devices introduced in the market including POCO X2, OPPO Reno 3 Pro, Vivo APEX 2020, Realme X50, 6 series, IQOO 3, to name a few

twitter-logoNidhi Singal | March 9, 2020 | Updated 09:13 IST
Coronavirus impact: So far so good for smartphone industry
Coronavirus news: How has the smartphone industry been impacted by the COVID-19 outbreak?

The 'Make in India' initiative has pushed the leading smartphone OEMs to manufacture their smartphones in India, however, for components, the industry continues to heavily rely on China. Even though there has been component supply disruption due to the coronavirus (COVID-19) outbreak in China, there hasn't been any significant impact on smartphone availability.

"Mobile phones is a just in time industry, have very low inventory, typically among all other. And due to the spring festival in China when labour is not at work, OEMs stock for up to three weeks. The timing has been extremely fortunate and that has saved the industry through for February, most of it. A lot of factories have opened in China but only between 20 to 50 per cent workforce has resumed work. As components are being airlifted, in terms of output there is a very marginal impact till now", Pankaj Mohindroo, chairman, Indian Cellular and Electronics Association.

While there hasn't been any shortage of stocks yet, there are only a few smartphone models that seemed to be affected. Xiaomi has temporarily hiked the price of Redmi Note 8 (4GB+64GB) variant. According to Xiaomi, "The extended shutdown was likely to have an impact on the supply chain and we continue evaluating as the situation keeps evolving each day but currently, we are able to fulfil the demand as of now. While we are working to explore alternative supply channels for components and raw materials, the immediate impact is that the short supply might cause some negative pressure on prices of these components. This has led to the increase in the price of the product temporarily." However, internal sources at the Xiaomi confirmed that the company accounts for natural calamities as well and usually keep a buffer stock of components as well. Xiaomi is launching its next Note device on March 12, however, has cancelled its entire on-ground event for March.

Also read: Coronavirus fallout: Tata Motors' JLR hit by 85% sales dip in China

Contrary to the speculations that the outbreak might delay the upcoming smartphone launches, OEMs have continued with the scheduled launches. Over the last month and a half, there have been many new devices introduced in the market including POCO X2, OPPO Reno 3 Pro, Vivo APEX 2020, Realme X50, 6 series, IQOO 3, to name a few.

Manish Khatri, Partner, Mahesh Telecom, a Mumbai based retailer, explains "there isn't any shortage of new launches like the OPPO Reno 3 Pro and Realme 6. However, there's a shortage of flagship smartphones, maybe because of the components that are manufactured abroad. It's possible that this could be a long-term strategy that these companies are limiting the stocks to ensure proper supply, at least for the coming days,"

After the festive quarter - October to December, the period between January to March is relatively dull. The flagship devices during the latter are in demand around January 26 (Republic Day sale) and February 14 (Valentine's Day). A Delhi based dealer confirmed that "many of my regular customers often push their purchases to April-May as its time for investments and tax cuts".

Also read: Coronavirus: Tata Steel starts sourcing materials from markets other than China

Prabhu Ram, Head-Industry Intelligence Group, CMR, says, "Until now, Chinese smartphone brands have cushioned themselves against the coronavirus-induced supply chain problems, as they have maintained an adequate stock of smartphone components till now. Going forward, we would need to keep an eye out for supply chain disruptions in China, as well as any component shortages that brands start facing here eventually. That would have a potential negative impact on the smartphone market in Q2."

Most of the companies and industry experts are positive to sail through March, the impact of supply chain disruption might be visible April onwards. However, slowly the situation might resume to normalcy soon.

"We have been deeply saddened by the outbreak of novel coronavirus and the affected people. However, with the improvement in the situation, it is expected that the production in China will gradually return to normal within the next two weeks, ensuring regular supply of materials to India. We ensured that we have localized solution at our factory to support timely production and deliver high-quality products. As an organization, OPPO is committed to seamlessly cater to the needs of our consumers," avers OPPO.

An e-mail query sent to Samsung and Vivo on the impact of smartphone market went unanswered.

Also read: Coronavirus impact: China's overseas shipments fall 17.2% in two months

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