Smartphones, TVs prices may rise amid Covid resurgence

International Data Corporation (IDC) research director Navkendra Singh said about 20-50% of India’s supply of electronic components comes from China, along with Shenzhen. “If we see another round of disruptions or the expected easing does not happen, we will definitely see price hikes across all brands. And no, most people will not be able to absorb the increase; It will be given to the consumer,” he said.

Singh said that if the lockdown in Shenzhen city goes beyond three weeks or more, it will affect shipments of smartphones and personal computers in the second half of June quarter as well as the September quarter.

Tarun Pathak, Director of Research, Counterpoint Research, confirmed that if the lockdown extends beyond March 20, the prices will start rising. He added that smartphone prices may increase by 5-7%.

Experts also pointed out that component prices and freight rates have risen in the last one year, which means most brands may not be able to absorb the latest cost pressures and will have to pass on to buyers. “If it expands, brands will pass it on to consumers as there is already cost pressure due to shortage of components,” Pathak said.

According to Sanchit Vir Gogia, principal analyst at Greyhound Research, while the scope of the impact will depend on how long the lockdown lasts, customers could see a 20-30% increase. “If the supply chain problem is resolved in the coming quarter, then around 10-15% growth can be expected,” he added. Analysts say that except Apple, most smartphone brands operate on a slim profit margin of 2-3%. The shortage of chips has affected all these brands already, and is expected to continue like that until at least the end of this year.

Arjun Bajaj, director, Videotex International, which makes televisions under the Daiwa brand, said raw materials such as high impact polystyrene (HIPS), acrylonitrile butadiene styrene (ABS) and copper have increased in prices. HIPS and ABS are used for electronics housing, while copper is a conducting material. The Russo-Ukraine war has also pushed up the prices of neon and palladium, two important components in the semiconductor supply chain.

That said, the current quarter is traditionally a period of decreased product supply for brands due to the New Year holidays in China. Many phone brands announce new products during February and March and these products start entering the retail market around this time. Bajaj pointed out that while some brands will have stock for 1-1.5 months, the new lockdown may delay the supply of the product.

“If the lockdown is extended, the industry will face consequences, with supply chain disruption leading to production slowdown and final product delays, as India is dependent on China for raw materials,” Bajaj said.

He expects television prices to rise 7-10% in Shenzhen due to the disruptions related to the Covid.