Smartphone production may fall 40% in India in first half of 2020

By second half though shipments are expected to go up by 15%

A man uses a smartphone in Mumbai, India, on Saturday, Feb. 15, 2020. Facebook, YouTube, Twitter and TikTok will have to reveal users' identities if Indian government agencies ask them to, according to the country’s controversial new rules for social media companies and messaging apps expected to be published later this month. Photographer: Dhiraj Singh/Bloomberg (Bloomberg)

Revising its estimates amid the novel coronavirus pandemic, a new report said on Thursday that smartphone production in India is likely to tumble by 38-40% in the first half (H1) of this year.

The prospects for H2 2020, however, are brighter with shipments likely to rise 15% year-on-year, thus, raising the industry spirits, said the report from CyberMedia Research (CMR)

"Our current India smartphone market assessment points to a bleak picture, with some promise in H2. We anticipate a significant drop of around 20% YoY in smartphone shipments in Q1," Prabhu Ram, Head-Industry Intelligence Group, CMR, said in a statement.

"There will be a full-blown impact in Q2 2020, with a sharp decline of around 28% YoY," Ram added.

Both supply and demand have been hit and while the OEMs could tide over the initial wave of coronavirus crisis in January and February with adequate component supplies, the closure of smartphone factories in India has dented recovery prospects for H1.

Samsung, Apple, Xiaomi, Vivo, Oppo, Realme and others have temporarily shut production in India amid the 21-day nationwide lockdown.

On the demand side, with the coronavirus scare, offline channels are massively impacted with sales down by 55-60%.

"If one were to go by China's experience, the online channels made-up for the deficit, incurred in offline channels. However, in the Indian context, with the initial 21-day lockdown in force, we are now looking at a rather uncertain future.

"That said, we believe online has the potential to pick-up in terms of sales during mid- to late- Q2 and beyond," said Amit Sharma, Manager-Research, CMR.

For smartphone brands, the coronavirus pandemic will cause them to reflect, and realign their market strategies.

"In H2, the smartphone market will recover, and perform better in the run-up to festive season and beyond. The pent-up consumer demand will be high, and with the right messaging from smartphone brands, consumers would seek to upgrade their value for money, and premium smartphones," Ram noted.