India’s smartphone market started strong, but IDC expects a slowdown 2Q21

The Indian smartphone market started the year with a healthy 18% year-over-year (YoY) growth in the 1Q21 (Jan-Mar), totaling 38 million units, but declined by 14% from a strong 4Q20. 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. Thus, the inventory cycle which had shrunk earlier in 2H20 started to get longer since mid-1Q21.

“The April-June quarter is expected to face growth challenges under the weight of the second wave of infections. However, the high shipments from the first quarter should be able to suffice for the immediate demand. But IDC estimates the impact to be less pronounced compared with last year, with factories being operational today and only limited restrictions on logistics/transportation and state-level lockdowns instead of a nationwide lockdown”, says Navkendar Singh, Research Director, Client Devices & IPDS, IDC India.

“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 next few months. 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,” adds Singh.

The key market trends for 1Q21 included:

• Online channels continued their growth momentum ahead of the overall market at 25% YoY, despite a slip in its share to 46% quarter-over-quarter (QoQ), while offline channels grew at 13% YoY. However, both the channels started to face higher channel inventory towards the second half of the quarter.
• MediaTek-based smartphone shipments continued to lead for three consecutive quarters with a share of 52%, widening the gap with Qualcomm, which had a 35% share.
• Almost 7% of overall shipments were 5G, leading to a 3% YoY increase in ASP to US$176. Further, the premium segment (US$500+), grew 143% YoY, with 71% of those based on 5G. Apple, Samsung, and OnePlus continued to dominate in that space; the iPhone 11 and 12 together accounted for 28% of shipments; followed by the debut of the Galaxy S21 series and the OnePlus 9 series.
• Separately, feature phone shipments declined by 8% YoY, despite Reliance Jio launching its new 4G device bundled with telco offers. However, the 2G segment witnessed 3% growth driven by iTel and Lava.

“IDC expects a boost in 5G shipments with more affordable options, stickiness through financing/trade-in programs, and steeper discounts/cashback offers. Additionally, vendors continue to focus on India as a manufacturing hub, which can be seen in their efforts in locally sourcing more components, ongoing investments in R&D capabilities, and adding new surface-mounting lines to cater to the growing local demand as well as for exports from India,” says Upasana Joshi, Associate Research Manager, Client Devices, IDC India.

 CT Bureau