Indian Mobile Shipment Takes a Hit Due to Coronavirus Outbreak

Apple and Samsung are expected to be the biggest brands to face the impact of coronavirus outbreak in China.

Most of the mobile components are imported from China.

(Photo: The Quint)

The smartphone industry is facing uncertain times with the impact of coronavirus likely to dampen production and shipment of units from different parts of China.

Reports suggest China, the world's number two economy makes 70 percent of all smartphones sold on the planet, including popular brands like Apple and Samsung.

And because of this outbreak, global shipments of smartphones may be 2 percent less than expected this year, according to market researcher Strategy Analytics.

In fact, Foxconn is also set to keep its factories shut for at least another week in the wake of the deadly coronavirus outbreak in the country, the media reported earlier this week. This stoppage is likely to disrupt Foxconn clients, the most visible being Apple, from shipping devices to customers, The Verge had reported earlier this week.

But this delay is going to have a spillover effect in the Indian smartphone market as well.

According to industry experts, if the lockdown continues for over a month or so, it will hamper the time-to-market strategy of nearly all Chinese brands as China provides bulk of various semi-knocked down (SKD) components like memory chips, touch panels/cover glasses along with semiconductors for smartphone assembling lines in India.

Unlike the completely built-up (CBU) units that are final products, SKD requires labour to assemble five-six key components which are imported and China is the main supplier, along with Vietnam and Taiwan.

Most Chinese brands are currently involved with nearly 100 percent SKD-level production in the country. Half of the handsets sold in India in 2018 were imported as SKDs while only 34 percent were imported as CKDs.

So, can they rely on the Indian vendors with crucial mobile components?

According to experts, the possibility of sourcing chipsets locally is still nearly four to five years away. Sensing the upcoming troubles, Chinese smartphone makers are currently in a huddle and strategising Plan B in case the supply chain remains affected for a long time.