Supply-chain constraints take the sheen off smartphones this festive season

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This holiday season, global supply chain bottlenecks and a shortage of chips and other electronic components are putting pressure on consumers’ wallets, reported The Times of India. Even while e-commerce platforms entice customers with cashback, EMIs, and trade-in offers, the news report, quoting experts and industry insiders, said that the pricing of many mass-market phone models is presently 8-10% higher. The festival season is a popular time for smartphone companies to introduce new models, but that hasn’t happened this year.

The report quoted Upasana Joshi, associate research manager at IDC as saying that the average selling prices (ASPs) of smartphones have risen from $155-163 to roughly $180 in recent quarters, owing to growing costs for OEMs and the introduction of more than 5G models.

Due to growing component prices, certain models’ prices have increased by 5-10%, but companies are responding by re-launching models with new chipsets, modifying accessories that come with the phone, and offering various incentives, the report quoted Counterpoint Research analyst Prachir Singh as saying.

Smartphone price hike

In research, Counterpoint discovered that several smartphone OEMs and vendors are only receiving about 70% of requests for crucial components, “and the issue appears to be growing worse as we move through Q3 2021”.

The company has cut its shipment growth expectation for 2021 to 6% from the previous forecast of 9%. The report quoting a representative revealed that from a price-comparison service, mass models from Xiaomi, Oppo, Vivo, and Realme have seen price rises ranging from Rs 500 to Rs 1,000.

Semiconductor chips have been in short supply and component prices have risen in the last year due to a variety of factors, including factory closures worldwide due to the Covid pandemic, container shortages, rising shipping costs, and a sharp increase in demand for automobiles and consumer electronics due to pent-up demand.

Apple CEO Tim Cook had warned in July that supply constraints would have an impact on iPhone and iPad sales. Cook had previously stated that shortages do not exist in high-powered processors, but rather in computer chips that perform functions such as driving displays or enabling audio