Mobile shipment targets cut further amid record-low inventory levels

Mobile shipment targets cut further amid record-low inventory levels

The handset industry is running at ‘historically low inventory levels’ with the latest power crisis in China adding to the already existing challenges around component shortages and supply chain hurdles, triggering market trackers to lower annual shipment targets further.

Counterpoint Research has cut its 2021 forecast further to 164 million units from 170 million, and TechArc, by another 2-3% from its expected 165 million. Others such as IDC and Canalys are keeping a close watch on the situation in an industry that is factoring in further delays in product launches.

“The outages are having an impact, but we see the situation stabilising in 3-6 months with a marginal impact on the supply chain. All these factors put together, including container shortages, has brought the industry inventories to historical lows,” said Pankaj Mohindroo, chairman of industry body India Cellular Electronics Association (ICEA).

China has been grappling with acute power shortages over the last few months and now several provinces are reportedly facing blackouts. Pick-up in manufacturing demand and measures to lower consumption of fossil fuels have led to these shortages. Manufacturing units have been asked to operate for limited hours and this is affecting all major importers, including India.

The spillover impact of the power crisis, along with increased freight prices due to container crunch and component shortages may lead to drop in shipment for India.

“The shipment numbers may fall from 170 million this year to 164 million. There will be increased dependency on manufacturing hubs in Taiwan and Japan for components,” said Neil Shah, partner at Counterpoint.

Techarc founder Faisal Kawoosa added that the impact will be mostly felt by the smaller handset players rather than the likes of Samsung, Apple and Xiaomi, because their supply chain partners are already factoring in supplies to these large customers.

Market research firm IDC said it will be watching the developments over the next few weeks.

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