The increase in coronavirus outbreak in China could halt manufacturing of smartphones in India as it could delay component shipments.
India is the world’s biggest smartphone maker after China but is still largely dependent on China for supplies of parts such as cells, display panels, camera modules and printed circuit boards, Reuters reported.
The Indian smartphone market grew 14 percent in Q4 2019 to 39 million units. Smartphone market in India grew 8 percent in 2019 to 148 million smartphones.
Research firm Canalys expects the Indian smartphone market to grow by 8 percent in 2020, to over 160 million units. Vendors remain bullish on the smartphone market, even as India looks ahead to its slowest GDP growth in six years.
Taiwan’s Foxconn and Wistron make iPhones in India for Apple, and Foxconn produces phones there for China’s Xiaomi as well. Other smartphone makers in India include South Korea’s Samsung and China’s OnePlus.
So far smartphone makers in India have managed the impact of the virus, partly because they had inventories of Chinese-made parts to cover the Lunar New Year holiday period when China’s factories close down.
“Those disruptions were already planned but if it the virus’ spread gets prolonged then for March and April production we will have serious trouble,” said S.N. Rai, co-founder of Indian smartphone maker Lava.
Indian smartphone OEMs can purchase some components from markets such as South Korea, Vietnam or Taiwan. But smartphone makers will only make such purchases as a last resort as it would force companies to make changes including in design and software, Rai said.
China’s OnePlus said its Indian operations could manage, in the short term at least.
“We are well covered because we have the entire production in India, we have enough stock, and even going forward many of the components will anyway be coming directly from other markets,” said Vikas Agarwal, India head of OnePlus.
The movement of technical staff from the country – such as on-site support executives, machine and automation specialists – will be curtailed and that will hit India’s smartphone sector.
Indian smartphone industry executives hope the outbreak can be contained within the next two weeks.
“If the problem persists beyond Feb. 10 then we have a real problem at hand,” said Pankaj Mohindroo, head of the India Cellular & Electronics Association.