The dramatic increase in Covid-19 instances is expected to intensify a component scarcity that has already led firms to reduce manufacturing in the first quarter of this year. According to industry analysts, consumer attitude and demand might be harmed due to the rising instances and concern of the fast-spreading Omicron form.
According to initial expert forecasts, phone shipments in the January-March period will decline by 20% from the quarter’s average of 54-55 million. The number of smartphones sold is expected to drop by 11 to 14 per cent.
“Brands who are strong in a certain area would strive to acquire 80-90 per cent of their shipments in that market,” said Faisal Kawoosa, founder of research company Techarc, to rationalise component consumption amid the ongoing scarcity.
Brands would limit shipments in any new category they seek to enter to 50-60 per cent to minimise inventory buildup amid worries that growing Covid cases could also limit demand, he added.
According to the research organisation, the overall shipment of mobile phones in the January-March quarter was around 43-44 million. Shipments of smartphones are expected to be 30-32 million, down from the quarter’s average of 35-36 million.
These projections are based on a rise of Covid-19 instances over the world. A new set of limitations imposed in China and Hong Kong has exacerbated an already strained component supply chain. According to IDC, the Omicron and Delta variant rise will drive customers to avoid purchasing pricey devices.
With only 45 rollouts this quarter, industry experts expect device releases to be hampered. In the January-March quarters of 2019, 2020, and 2021, respectively, 60, 46, and 67 phones were released. Because of the epidemic, the number of releases in 2020 was low, while the number of launches in 2021 was huge due to pent-up demand.
Meanwhile, a lack of chipsets has driven smartphone manufacturers to concentrate on 5G phones, with future usage in mind. The months of January to March are traditionally the slowest for phone sales, with most purchases occurring during the festival season, which begins with Diwali and ends in December.
According to Canalys, the chip scarcity scenario will persist in the first half of this year, and suppliers will attempt to offer new models based on component availability. It is expected that 179 million goods will be sent in 2022, up from 163 million in 2021.
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