Which is Worse …
India is in a somewhat unique position in the smartphone space. It is the world’s fastest growing market making it one of the more desirable places for smartphone brands to assemble smartphones. Samsung has its largest manufacturing facility in Noida and Apple just recently announced a production shift from China to India for a number of products, but while those headlines are the ones most folks might see, the currents below the surface belie a different tale.
The COVID-19 pandemic was and is still a big issue in India, and over the last year has caused both factory shutdowns and economic challenges to both the smartphone supply chain in the country and the population itself. That, coupled with an ongoing border ‘war’ with China, has changed the tone of the Indian smartphone market and affected buying patterns, but when it really comes down to what is weighing on the Indian smartphone supply chain, its none of those problems.
Once again, component shortages are now considered the single biggest impediment to smartphone production in India, particularly chip sets, which are the heart of smartphones, in some cases causing local brand factories to reduce staffing to 50% or less of previous numbers, and ODM production is similarly affected, as dedicated brand producers are at the top of the component hierarchy. This comes at a time when the effects of Huawei’s substantial smartphone shipment reductions are leaving a gap in the mid to high-end tier in the country, pushing almost all brands to focus on just the area where the silicon shortages are the greatest.
Last April India also changed its foreign direct investment rules requiring that all countries that have a land border with the country must get government approval before investing in new projects or facilities. This has made it far more difficult for Chinese companies to invest in India, given the border issues, and thus far new investment from China has been mired in government reviews and limitations of Chinese border crossings have left many factories with Indian workers but few Chinese managers. That said, US tariffs on Chinese produced goods continue to push businesses to move production to India but the pace of such movement and investment has slowed and is worsened by component shortages. While India is still a primary manufacturing location for high volume markets, and an alternative to China, it seems that the bloom is off the rose a bit. It seems that it is still better to have demand and not be able to supply it than not having the demand at all, yet neither would be best.
The COVID-19 pandemic was and is still a big issue in India, and over the last year has caused both factory shutdowns and economic challenges to both the smartphone supply chain in the country and the population itself. That, coupled with an ongoing border ‘war’ with China, has changed the tone of the Indian smartphone market and affected buying patterns, but when it really comes down to what is weighing on the Indian smartphone supply chain, its none of those problems.
Once again, component shortages are now considered the single biggest impediment to smartphone production in India, particularly chip sets, which are the heart of smartphones, in some cases causing local brand factories to reduce staffing to 50% or less of previous numbers, and ODM production is similarly affected, as dedicated brand producers are at the top of the component hierarchy. This comes at a time when the effects of Huawei’s substantial smartphone shipment reductions are leaving a gap in the mid to high-end tier in the country, pushing almost all brands to focus on just the area where the silicon shortages are the greatest.
Last April India also changed its foreign direct investment rules requiring that all countries that have a land border with the country must get government approval before investing in new projects or facilities. This has made it far more difficult for Chinese companies to invest in India, given the border issues, and thus far new investment from China has been mired in government reviews and limitations of Chinese border crossings have left many factories with Indian workers but few Chinese managers. That said, US tariffs on Chinese produced goods continue to push businesses to move production to India but the pace of such movement and investment has slowed and is worsened by component shortages. While India is still a primary manufacturing location for high volume markets, and an alternative to China, it seems that the bloom is off the rose a bit. It seems that it is still better to have demand and not be able to supply it than not having the demand at all, yet neither would be best.
RSS Feed