Covid-19 crisis to derail growth momentum of smartphones in India: Canalys

The second wave of the pandemic in India will derail the growth momentum of the smartphone segment in the country, and the supply crunch in key imported components may lead to rise in the average selling price, according to research firm Canalys.

Smartphone shipment in India grew 11 per cent in the March 2021 quarter to 37.1 million units, from 33.5 million units in the year-ago period, as per Canalys data.

The research firm said smartphone shipments in India is expected to plunge in the second quarter due to the second wave of COVID-19.

"As the geographical distribution of cases varies widely, a nationwide lockdown seems unlikely. But regional lockdowns could hamper transport of raw materials and devices due to limited inter-state travel.

"Hence, for smartphone brands and channels, building up optimum inventory could prove to be a hurdle in the second half of the year," Canalys Analyst Sanyam Chaurasia said.

Canalys Analyst Varun Kannan said looking further into 2021, unfavourable macroeconomic factors will lead to a rising smartphone average selling price (ASP).

"A combination of the ongoing supply crunch on key imported components and a weaker Rupee will make it increasingly difficult for vendors to maintain margins at current price levels. Consumers will bear the brunt of this cost, which will hit particularly hard in the sub-USD 200 smartphone segment, which accounted for 81 per cent of the market last year," he added.

Canalys said smartphone shipments in India grew 11 per cent in Q1 2021 as favourable macroeconomic factors helped smartphone vendors capitalise on the growing importance of smartphones for remote education for Generation Z and for work and leisure for millennials.

Millennials refers to those born between 1980s and 1995, while Generation Z are those born between 1996 and the early-mid 2000s.

Chinese vendors like Xiaomi, Vivo and Oppo collectively shipped 76 per cent of the smartphones in the said quarter, it added.

Xiaomi shipped 10.5 million shipments accounting for 28 per cent share, followed by Samsung with 7 million units' shipment (19 per cent share). Vivo shipped 6.7 million units (18 per cent share), Oppo 4.7 million units (13 per cent share) and Realme 4.3 million units (12 per cent share) in the March 2021 quarter.

In the premium segment, Apple had a stellar performance in what is traditionally a soft quarter, Canalys said.

"Following a strong festival quarter, it shipped over a million iPhones in Q1, with demand for the iPhone 12 supported by local assembly and attractive finance offers, as well as sustained demand for the older iPhone 11. But the market-wide celebration will be short lived, as a resurgence of COVID-19 in India in Q2 will derail momentum, it added.