Supply chain issues to impact India’s smartphone shipments in Q4, says IDC

The ongoing October-December quarter is expected to see a decline in smartphone sales in the country due to the ongoing supply chain related challenges, resulting in annual shipments below 160 million in 2021, IDC said on Friday.

Navkendar Singh, Research Director, Client Devices & IPDS, IDC India said that the first half of 2022 will remain challenging, with some easing out expected in the latter half of 2022.

“Vendors/channels will keep an eye on the over-stocking situation in case demand stays limited due to the price hikes by the suppliers and vendors,” he said.

India’s smartphone market registered a year-over-year (YoY) decline of 12% in 3Q21 (Jul-Sep), shipping 48 million units after four consecutive quarters of growth. Much of this can be attributed to component shortages as well as an unusually high 3Q20 comparison base whereas this year’s post-lockdown demand was addressed by July, IDC said.

Counterpoint, in its recent report, said that Q3 smartphone shipments declined 2% YoY to reach over 52 million units. Canalys, on the other hand, said that smartphone shipments in India fell 5% year on year in Q3 2021 to 47.5 million units as vendors struggled with supply issues for low-end models.

As per IDC, 3Q21 grew by 3% compared to 3Q19 as channels stocked up for the Diwali quarter amid the supply shortages. The tracker said that the first nine months of the year (Jan-Sep’21) already shipped 120 million units, with 1H21 clocking 42% YoY growth.

During the July-September quarter, the online channels clocked a record high 52% share, although with a 5% YoY shipment volume decline, IDC said.

eTailer sales festivals such as the Big Billion Days on Flipkart and Amazon Great India festival started in early October, even before the Navratri festival this year, continuing until Diwali.

Offline channels registered an 18% YoY shipment decline. IDC expects online shipments to surpass offline shipments in 2021.

The IDC report revealed that India was the third-largest 5G smartphone market globally with 7% of worldwide 5G shipments, shipping 10 million units at an ASP of US$401 in 3Q21.

From Jan-Sep ’21, 17 million 5G smartphones were shipped to India and is expected to be under 30 million for 2021. The OnePlus Nord CE, iPhone 12, and Galaxy A22 were the most popular 5G models in 3Q21.

Overall ASPs peaked at US$196, driven by price hikes and a greater 5G contribution. The sub-US$200 segment dropped by 24%, while US$200+ smartphones grew by 56%, signaling a shift to higher price buckets, driven primarily by supply.

“IDC believes that a growing dependency on smartphones triggered by remote work and learning, as well as a subsequent requirement for better quality hardware is pushing consumers to spend more. With continued chip shortages and logistics costs, brands are also compelled to expand upwards in terms of price points across channels,” said Upasana Joshi, Research Manager, Client Devices, IDC India.

During the quarter, Xiaomi’s shipments declined by 17% YoY even as its sub-brand Poco witnessed high 65% YoY growth. 72% of Xiaomi’s shipments were concentrated in the online channel, with its market share there dropping to 32%.

Samsung, at the second slot, registered the highest YoY decline amongst the top 5 vendors at -33% in 3Q21. The opening quarter for the Galaxy Z Fold3 and Z Flip3 witnessed a demand surge but had supply constraints. Samsung stood at a leadership position within the 5G segment with its new model offerings.

Vivo was at the third position, with a shipment decline of 13% YoY. It continued to cement its offline presence with a share of 30% of that segment.

Realme at the fourth slot had the best performance of the top 5 vendors with a YoY decline of 5%. In the online space, it continued to be at second slot ahead of Samsung with a high 22% share.

OPPO, at the fifth slot, witnessed a decline of 16% YoY in 3Q21. However, in the US$300-500 segment, OPPO rose to the second slot with an 18% share, driven by high shipments for the Reno 6 series. Also, it slipped to the third slot in the offline channel with a 17% share there.