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Smartphone shipments in India likely to slow down in second quarter: IDC

Written by Moulishree Srivastava Published on     3 mins read

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India’s vaccine roll-out program at the beginning of the year instilled positive sentiment, but the second wave of COVID-19 infections has resulted in subdued consumer demand.

The Indian smartphone market, which began 2021 on a positive note clocking 18% growth in the January to March quarter over the same period last year, is likely to go into a slow down in the second quarter of 2021 as the second wave of novel coronavirus infections dampened the consumer demand in the world’s second-most-populous country, according to a new report by market intelligence firm International Data Corporation (IDC).

In the first quarter of 2021, shipment of smartphones stood at 38 million units, down by 14% compared to the fourth quarter of 2020, which saw a rise in shipments on the back of the pent-up demand and festive season sales that happen at the end of every year.

“While the vaccine roll-out program at the beginning of the year instilled positive sentiments, the onset of the second wave of COVID-19 infections towards the end of the quarter resulted in subdued consumer demand,” the report said.

Navkendar Singh, research director, client devices & IPDS at IDC India, said the April–June quarter is expected to face growth challenges under the weight of the second wave of infections. But, he said, the “high shipments from the first quarter should be able to suffice for the immediate demand.”

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Singh estimates that the impact of the second wave of coronavirus would be less pronounced for the smartphone industry compared to last year, as factories are still operational and there are limited restrictions on logistics.

Last year, when the pandemic hit and the country went into a two-month-long lockdown in late March, the operations of all the smartphone players were badly impacted. Imports of smartphone components from China were also stopped during that time period, which severely disrupted the supply chain. Meanwhile, consumers stopped their discretionary spending amid the crisis, which resulted in a muted sales in the third quarter of 2020. As the number of infections subsided by Q4, smartphone players saw the demand coming back during the festive season, which begins in October and lasts till year-end.

As India struggles with new infections that are increasing at an alarming rate, many state governments have imposed lockdowns with their own set of restrictions. However, even though a few states like Karnataka, where smartphone manufacturers Foxconn and Winston have their factories, have allowed the production of handsets, it hasn’t helped them much as many employees have contracted the coronavirus, forcing these units to function at a reduced capacity.

“The recovery in 2021 might not be as smooth as expected earlier, with uncertainty around the lasting impact of the second wave and a possible third wave in the next few months,” Singh noted.

“IDC expects a rebound in consumer sentiments in the second half of 2021, resulting in a single-digit growth annually. However, the degree of growth will be restricted due to reduced discretionary spending, supply constraints, and anticipated price hikes in components in upcoming quarters,” he added.

Overall, Xiaomi has retained its top position with a 27.2% market share in Q1 2021, despite posting a 3% year-on-year growth, as per the IDC data. The Chinese electronics giant was followed by Korean major Samsung at 19% market share, which clocked 43.4% growth in Q1 2020 over a year-ago period.

Vivo, Oppo, and RealMe, that fall under the umbrella of Chinese titan BBK Electronics, were the other three players in the top five smartphone vendors in India.

Going forward, “IDC expects a boost in 5G shipments with more affordable options, stickiness through financing/trade-in programs, and steeper discounts/cashback offers,” said Upasana Joshi, associate research manager, client devices, IDC India.

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