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Industry players fear that local production of handsets may come to a complete halt starting next week in the absence of supplies from China. Analysts expect smartphone sales to fall 10-15% in the January-March quarter, but expect a sharper impact in the April-June period, and four to five week delays in new launches.
“The extended shutdown in China is likely to have an impact on our supply chain and, there is a risk of impact on the overall quantum of component supplies,” a spokesperson for Xiaomi, India’s top smartphone maker, told ET.
“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 the prices of these components,” the spokesperson added.India Cellular and Electronics Association (ICEA) chairman Pankaj Mohindroo told ET that the industry has started running out of stocks and if things don’t turn around by this weekend, then “there will be serious disruptions”.
Industry officials say battery and some camera modules are made in Vietnam, while displays and connectors are majorly made in China. Chips are made in Taiwan but are sent to China for the final build-up. Feature phones sales are set to take a massive hit since the key printed circuit board (PCB) component is imported from China.
"For February, sourcing of components and materials take place in December and January, while for March, sourcing was supposed to take place in mid-February, which is not happening. So, after the first two weeks of March, there will be a shortage of devices," one of the officials said.
But stocks of Apple’s iPhone 11 and 11 Pro are already running low, or are already out in some stores, said retailers.
"We do not have iPhone 11 of 120 GB, a popular model. For the others, right now, we have handsets available but very few remain. There has been no new supply. We hope that the new supply will come next month," said an employee at the Apple store in one of the largest malls of New Delhi.
This supply crunch is not restricted to just one city.
"Most of the 11 pro series are not available and there is very limited stock of iPhone 11-64GB. We have returned customers who wanted the series in 120 GB," said the manager of an Apple store in central Mumbai.
He added that the stock crunch also included Apple Watches and Macbooks. "We were told it will take at least three weeks for new supply," he added.
In China, only some factories have got permission to open, even as the death toll from the deadly coronavirus outbreak crossed 1,000. As a news agency reported that Taiwan's Foxconn, the main manufacturer of iPhones, hopes to resume half of its production in China by February end, and touch 80% of production in March.
Apple didn’t respond to ET’s emailed queries.
“If there is pressure on components, then there is an increase in production cost, and it can have an impact on the prices of certain products in India. At the same time, companies will delay new product launches since they won’t have supplies for production,” Tarun Pathak, associate director at Counterpoint Research, said.
Source : https://telecom.economictimes.indiatimes.com/news/smartphone-makers-start-to-feel-the-pinch-of-china-lockdown-factories-may-stop-production-from-next-week/74102120