NEW DELHI : India may face a shortage of components for smartphones and electronic devices in July-September due to disruptions in manufacturing activity in Chinese electronic hubs such as Shanghai and Shenzhen, which in turn will impact on sales during the festive months of October-December.
The resurgence of covid cases in many Chinese cities, including major electronics manufacturing hubs, has led to reduced production and supply constraints, in addition to creating port congestion, which is sure to create downstream supply chain problems and hurting production in India, according to analysts who follow the sector.
“There is significant potential for the ongoing pandemic crisis in China to shake up supply chains and once again cause a pandemic redux. As such, with the continued supply-side shortages and soaring prices, smartphone brands in India will potentially face significant challenges in the immediate future,” said Prabhu Ram, Head of Intelligence Group. industrial, CyberMedia Research.
“It is indeed a cause for concern. For the holiday season to remain unscathed, the situation in Shenzen and Shanghai must be resolved by the end of June at the latest,” said Faisal Kawoosa, founder of the company. TechArc research.
The September quarter is important for supplies or sales because most brands place orders for components of smartphones and other electronic devices, in order to stock up for festivals.
Electronics sales usually peak in October-December during Navratri, Dussehra, Diwali, Christmas and New Year. So, placing orders in advance is essential, as brands also launch new models as they approach. end of year celebrations.
The covid situation in China has exacerbated an already volatile supply situation, analysts said. The upstream semiconductor supply chain is facing hurdles due to low neon production levels due to the ongoing conflict between Russia and Ukraine. Rising oil prices are also fueling inflation, leading to higher transportation and logistics costs, as well as operational costs, for businesses across the board. The impact of this is already visible.
“We are seeing an impact in Q2 2022 (April-June). Brands are reducing their orders and there is uncertainty. A prolonged lockdown in these regions will certainly impact the entire electronics industry,” said Prachir Singh, Principal Research Analyst at Counterpoint Research.
With high inflation affecting consumer behavior, the market may show an average performance in the April-June quarter.
As such, brands will need to strategize for the holiday season and Q3 2022, with product launches, offers and discounts to maximize sales, he said.
“Prices and supply will remain under immense pressure in the third quarter. It’s still two months away. If lockdowns ease by July, there may be hope for sustenance,” Navkendar Singh said. , Research Director, IDC India.
