Mobile Phone Production Down 50% on Covid

Mobile phone production down 50% on Covid hit Slowdown visible since SMARTPHONE SHIPMENTS late February, says IDC Figures in million units VIVEAT SUSAN PINTO & ARNAB DUTTA Mumbai/New Delhi, 11 May Localised lockdowns, a semiconductor shortage, and a surge in Covid-19 cases at factories have led to a slowdown in mobile phone manufacturing and sales 32.0 18.2 54.3 45.0 38.0 in April-May, heads of several com- Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar panies told Business Standard. 2020 2021 Industry veterans such as S N Rai, co- Source: IDC founder, Lava International, and Rajesh Agarwal, co-founder, Micromax, said Apple’s contract manufacturer in India. Once the lockdown curbs are lifted, we production was down about 50 per cent It also produces phones for Xiaomi in may slowly see a revival,” Agarwal of in this period as the pandemic raged the country. Micromax said. across the country. According to research firm IDC, a Navkendar Singh, research director “The situation is certainly challeng- slowdown in smartphone shipments at IDC India, said, “The recovery in cal- ing in this (June) quarter. Though some began showing up as early as late endar year 2021 might not be as smooth firms, including ours, could carry on February, though companies insist that as expected earlier, with uncertainty production in April because of buffer the March quarter was fine, albeit on a around the lasting impact of the second component stocks, not all companies low base. wave and a possible third wave in the were able to do it. May, so far, has been The IDC data for the January-March next few months.” disastrous for all, as the disease spreads 2021 period shows a decline of 14 per Singh said he saw single-digit year- and lockdown curbs remain intact. At cent in smartphone shipments versus on-year growth for the smartphone mar- an industry level, therefore, the hit to the December quarter. On a year-on- ket in 2021, a markdown from the earlier business is easily 50 per cent,” said Rai. year basis, however, the growth is expectations of double-digit growth for On Tuesday, news agency Reuters, 18 per cent. the year. He also warned of reduced dis- citing sources, reported a 50 per cent cut “The June quarter will be difficult, cretionary spending, supply chain con- in production of iPhones at Foxconn’s more so because sentiment is down. The straints, and anticipated price hikes in Chennai facility due to a wave of Covid- second Covid wave has increased very components in the quarters ahead. 19 infections at the factory. Foxconn is quickly, affecting shopping sentiment. Turn to Page 13 > Telecom firms see red... Rai said that while production could begin with a lag of two to three weeks once lockdown curbs were lifted, he anticipated a decent recovery for the market in the coming months. IDC makes an interesting observation here. It notes that inventory pipelines began getting longer as buying sentiment began changing from end of February-early March, implying the sector is not out of the woods yet and that consumer sentiment is fickle. “Though the vaccine roll- out programme at the begin- ning of the 2021 calendar year did instill positive sentiment among consumers, the onset of the second wave of Covid- 19 infections towards the end of the quarter has resulted in subdued consumer demand. Thus, the inventory cycle, which had shrunk earlier in the second half of 2020, began getting longer towards the lat- ter part of the March quarter,” IDC said. Also, consumers at the upper end of the smartphone market were more inclined to buy phones versus those at the mass end. In the March quarter, for instance, shipment of phones priced above ~37,000 grew by a whopping 143 per cent versus last year, while shipment of phones priced under ~2,000 declined 8 per cent. The IDC data shows that leading smartphone player Xiaomi registered only 3 per cent year-on-year growth in shipments in the March quarter, despite a low base. Vivo and Realme reported a 3 and 4 per cent year-on-year decline in shipments for the period under review. Medium HOW TO PLAY .

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