New Delhi: Mobile phone companies have reduced their production capacities by up to 20% year-on-year between January and April, “due to continued steep fall in sales in the last six months” reports The Economic Times, citing industry executives.
The shipment of smartphones, taken as a proxy of sales – had fallen sharply “by 30% year-on-year in October-December 2022 period and by 18% in January-March 2023 as compared to the same period last year,” according to latest data from researcher body, Counterpoint.
Tarun Pathak, director of research at Counterpoint is cited as saying that companies have slashed production by 15-20%. This is more in the lower and mid-tier segments, as the sale of expensive phones is still steady. He is cited as saying that most brands “have almost ten weeks of unsold inventory.” India’s largest mobile phone retailer, Reliance Retail had also admitted to mobile phone sales going down in the January-March quarter.
The cutback in production of phones has happened for the first time this year, and is steeper than the cutbacks made twice in production last year, reports the newspaper.
Earlier this year, in February, Counterpoint reported that “smartphone market in India declined 9% YoY to reach shipments over 152 million units in 2022.”
An analysis in The Business Standard last month said, “the entry-level handsets are usually priced under Rs. 8,000. Overall, smartphone shipments declined but..while India’s smartphone shipment witnessed a 9% year-over-year (YoY) decline, the share of the premium smartphone segment jumped to register itself into double-digit numbers for its maiden time.”
Navender Singh, Associate President IDC India, had said of the different paths charted by the low and mid-tier segments versus the top end smartphones had said, “the growing divide between the have and the have-nots is seen in the smartphone market as well.”
Pradeep Jain, managing director of Jaina Group, which manufactures smartphones told The Economic Times that it was about a global slowdown too. “Companies have cut production to align to the demand scenario and this pressure is likely to continue for some time,” he said.