China’s decision to lock down tech hub Shenzhen due to a new wave of Covid-19 will potentially lead to more supply-chain disruptions for India’s mobile handset industry. If the Shenzhen lockdown “extends beyond two weeks, then we will be looking at a muted January-March and a very slow April-June in India”, Tarun Pathak, research director at industry analysis firm Counterpoint, said.
The industry is wary not just of the lockdown in Shenzhen but the resurgence of the pandemic across China, as well as Vietnam, Thailand and South Korea, among other countries, market watchers said.
Pathak said second quarters of the past two years have been tough for the industry due to Covid-19 outbreaks, and this would be the third successive second quarter which could be affected.
Shenzhen and Shanghai imposed citywide lockdowns on Sunday as the coronavirus outbreak continued to spread across much of mainland China. The lockdown is scheduled to last a week. Shenzhen, which has one of the world’s largest ports, is the hub of China’s tech and electronics manufacturing industries, thus leading to fears that the lockdown might further disrupt global electronics and handset supply chains. Critical components for handsets such as connectors, cables, display, printed circuit boards (PCBs), and semi-knocked down units (SKDs), mostly come from the Shenzhen area, analysts said. “Given that supply chains are closely interconnected and interdependent, the week-long factory closures in China’s tech hub Shenzhen are potentially a cause of concern for smartphone brands in India,” said Prabhu Ram, head – industry intelligence group at market research firm Cyber Media Research. Pehal News