Cellphone production cut surpasses last year’s measures

Plummeting demand has driven down the manufacture of handsets in India between January and April this year, The Economic Times has reported quoting industry experts. Demand has slackened so much that most brands are reportedly saddled with 10 weeks of inventory.

According to Counterpoint, which is a researcher and compiler of data of the mobile phone industry, experts hope that sales might pick up in the second half of the current year, while the first quarter of the current financial year would witness a continuation of the demand woes.

30% drop in Oct-Dec

The figures are tell-tale. During the October-December 2022 period shipments of smartphone fell by a massive 30% compared to the same period in 2021, while the shipments in January-March 2023 declined by 18% compared to the same period in the previous year.

The lack of demand has not hit all the segments uniformly with the entry and mid-segments ie, the lower-priced models taking the bigger hit with production bring trimmed by about 15-20%. The premium models have recorded better sales.

Manufacturers also point out that the decline in demand is not being felt in India only but across the world and brands are trying to adjust output to keep pace with the sales and avoid building up of inventory.

Interestingly, the mobile phone industry staggered through unstable demand in 2022 as well – in April-July and November-December. However, the production cuts in those two periods were by 5-10% which is far lower than the cuts than the current episodes.

The mobile phone industry has been one of the flag bearers of India’s resurgence in manufacturing. While presenting the budget for 2023-24, Union finance minister Nirmala Sitharaman said that while only 5.8 crore cellphones were manufactured in the country in 2014-15, the number crossed 31 crore handsets in 2022-23. While the value of this output was Rs 18,900 crore in 2014-15, value rose to Rs 2.75 lakh crore in the last financial year.