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Slowdown in demand hits handset manufacturers

The handset manufacturers that had availed the PLI scheme incentives, with rising retail prices, and subsequent slowdown in demand are not able to get sufficient orders. This has resulted in a failure to meet their respective production targets under the scheme.

Lava International, Micromax and Optiemus have not been able to meet the incremental targets for FY22. And all five of them, including Dixon, and UTL Neolyncs are likely to miss the FY23 targets.

According to IDC the India smartphone market exited 2022 with 144 million shipments (the lowest since 2019), with a 10% decline YoY (year-over-year). 4Q22 declined 27% YoY as shipments fell to 30 million units. Despite multiple price discounts and channel schemes, high inventory levels after Diwali restricted new shipments.

Dwindling consumer demand due to high inflation remained a challenge throughout the year despite the improved supply situation. The ASP (average selling price) hit a record US$224, rising 18% YoY in 2022.

“The entry-level segment (sub-US$150) shrank to 46% of the market, down from 54% a year ago. The dearth of new launches in this critical mass segment was a barrier for new smartphone users, thus limiting the overall market’s growth,” said Upasana Joshi, Research Manager, Client Devices, IDC India.

“We should expect a rather difficult and elongated recovery for the smartphone market, as worries around rising prices and excess inventories will remain a concern through at least the first half of 2023. Vendors and channel partners need to rethink their plans for their entry-level portfolios, driving 5G device affordability with attractive trade-in programs and financing schemes, ” says Navkendar Singh, Associate Vice President, Devices Research, IDC.

CT Bureau

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