We are nearing the festive season in India but we are likely to witness the launch of fewer smartphones as the prices. What's shocking is that the prices of existing smartphones are likely to shoot up by 7 to 10 per cent. This price hike could be attributed to the severe shortage of components such as semiconductor chips.
Supply Chain Issues
As per PTI, there is a massive demand for semiconductors as the trends such as online education and remote working have grown during the ongoing pandemic crisis. This growth in semiconductor demand has subjected the global supply chains to a huge strain.
In China, the freight costs have skyrocketed, thereby pressurising the device manufacturers. Notably, China accounts for a majority of components supplied to be used in electronic devices in India. As per Tarun Pathak, the Counterpoint Research Director, the supply chain shortage is likely to continue to leave an impact on the mobile phone industry for two more quarters.
He added that the important festive season will be impacted in numerous ways such as fewer new models, delayed launches and a price hike as mentioned above for existing devices. Also, there will be fewer offers for buyers. However, the demand for new models is likely to stay strong during the festive season. Besides chip shortage, the chipsets are to be impacted and this is to stay until the second half of 2021.
Shortage In 5G Chipsets
When it comes to the 5G chipsets, it is estimated that there will be a relatively better situation for the 5G chipsets as the premium ones crunch easily in the latter half of this year. Also, in the mainstream market aka mass market, the 5G chipsets will be in short supply. Notably, these manufacturing facilities are said to be used for the manufacturing of chips in the country. While orders from the smartphone industry are of high priority when compared to the other segments by the fabrication units, there will be a prioritisation.
As per Realme Vice President and India and Europe Chief Executive Officer Madhav Sheth, the shortage in the chipset is a challenging issue for smartphone manufacturers. He noted that as production and distribution facilities are open, these expand operations gradually. He added that the chipset shortage will see some relaxation only post the second quarter of 2022.