India smartphone industry has started to feel the ripple effects of the deadly coronavirus infection which in China has forced several factories to extend a shutdown. Indian companies are bracing for a major supply shortage.
It is commonly known that the production of Chinese factories gets delayed or slow down from late January due to their Lunar New Year holiday celebration period, which in turn prompts many importers to stock up in anticipation of the closures. This time the outbreak of the Coronavirus coupled with the delayed production due to the celebrations has completely derailed businesses as no one had anticipated the outbreak. Many factories in China which were due to reopen shortly after the celebrations have now deferred their plans to next month amid their fears that workers coming in close contact with those infected will lead to a growth spurt in cases of the disease.
Indian smartphone vendors have become the latest victim of these extended shutdowns of factories which manufactures components for smartphones in China. Market leaders such as Xiaomi are expecting that their component prices will rise immensely as their supplies which were bound to be received from China have started getting hit. On the other hand, Indian retailers are worried that the short supply of many popular smartphones could result in a loss of business as their existing stocks are running out fast.
Hence, smartphone sales in India are expected to fall by 10-15% in Q1 20202 with an even sharper impact in the period between April and June. Launch of new smartphone models is also expected to be delayed by 4-5 weeks. Key industry players in this domain fear that local production or assembly of handsets in India might just come to an absolute halt starting next week in the absence of supplies from China due to the outbreak.
It was reported by Taiwan’s Foxconn which happens to be the main manufacturer of iPhones hope to resume half of its production in China by the end of February and touch 80% of production in March. As the death toll from the deadly coronavirus outbreak crossed 1,000, only a handful of factories have got permission to reopen in China.
China’s Impact on India’s Smartphone Market Amid The Outbreak
Around 36.9 million smartphones were shipped to India in the fourth quarter of 2019, however, with the advent of the outbreak of the virus in China, that number is expected to dip in the first quarter of 2020.
The Indian economy has lately become highly dependent on China, mainly due to the exponential expansion in trade linkages over the past two decades. Many analysts have predicted that the pressure of the shortage of components from China will trigger an increase in production cost which will, therefore, most certainly have an impact on the prices of the smartphones in India. Xiaomi has already increased the price of their ‘Redmi Note 8’ smartphone model blaming the existing conditions. Other smartphone giants will surely follow suit as they start feeling the heat of the supply crunch as well.