Smartphone brands are feeling the lack of chipsets, prompted by the global coronavirus pandemic that has wreaked havoc on supply chains. Major smartphone brands such as Samsung, Oppo, Realme and Xiaomi have all been affected, but Apple has been the most resilient. In short, chip shortages this year caused a worldwide crisis in the smartphone industry, but the situation will ease in 2022, say industry experts.
The shortfall is so great that the global smartphone industry declined by 6 percent in the third quarter of 2021 compared to the same period last year. According to market research firm Canalys, the situation in India is equally dire, as sellers in India, especially for low-end smartphones and smartphone shipments grappling with supply issues, declined 5 per cent year-on-year in Q3. The chipset crisis is real and will continue to plague smartphone makers until at least the first half of next year.
“As H2 2021 ends, COVID-19 lockdowns become intermittent, and supply chains become more conducive, the situation is getting better. But, we are still not out of the woods and the first half of 2022 The situation is likely to improve by the half-year, assuming that no further COVID wave disrupts the supply-demand balance,” Varun Mishra, Analyst, Mobile Devices and Ecosystems at Counterpoint Research, told ABP Live. However, according to Navkendar Singh, Research Director-Client Devices & IPDS, IDC India, the industry is not going to see a rebound until mid-2222.
Singh told ABP Live, “The logistics and containers issue in the last few months has led to supply issues since the pandemic. All else being equal, we should return to some normalcy by the end of 2022.”
Interestingly, the supply chain shortfall was not only a result of the ongoing COVID-19 pandemic but also the blockage of the Suez Canal. It was a temporary ‘nightmare’, but it certainly severely affected the global supply chain. Experts had warned that the blockage of one of the world’s busiest waterways would reverberate through supply chains.
Singh said, “COVID-19 has been the major driver of this situation, which is further aggravated by the blockage of the Suez Canal, resulting in severe supply chain crisis across the world and especially in the region (India). It is done.”
Apart from these, COVID-19-created supply issues as well as huge demand for equipment also contributed to the situation. “There are many other reasons including low investment in wafer capacity, low yield rates in newly installed fab lines, increased demand for semiconductors in 5G and other sectors such as automotive and geopolitical conditions,” Mishra said. Factors making the chipset woes worse.
As 2021 approaches, the situation has improved a bit, at least on the smartphone side, especially for mid-to-high-tier smartphones. However, smartphones in the lower-end or entry-level segment still go through troubled waters. The shortage of components is also paving the way for an increase in handset prices which are being passed on to the consumers, especially by the brands running on low margins.
The increase in smartphone prices was also a result of OEMs opting for air transport instead of sea route due to non-availability of containers and increase in fuel prices etc.
What do smartphone makers Xiaomi and Realme have to say about the lack of chipsets in India?
Realme partnered with the best chipset makers
“India is one of the most important markets for Realme. To address the chipset shortage issue, we are actively collaborating with fast growing chipset manufacturers who can provide best value processors without compromising on performance. Irrespective of the prevailing issue, we have ensured that industry-leading and flagship chipsets for premium products are not compromised,” Madhav Sheth, CEO, Realme India, VP, Realme and President, Realme International Business Group, told ABP Live. Told.
Xiaomi expanding manufacturing capabilities in India
“With the uncertainty brought by the pandemic, we have been witnessing a shortfall in the supply chain for the past one year. As the lockdown restrictions are eased and the situation returns to normal, we are hopeful that the supply chain situation will also pick up pace. We are working with various vendors to ensure that there is enough and more supply to meet the needs of our consumers. We are also working towards expanding our local manufacturing capabilities. Earlier this year, we added two new manufacturing partners – DBG and BYD – to meet consumer needs and bridge the demand-supply gap.”
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