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Unraveling the mystery: Decline of smartphone shipments in India

Smartphone sales in India have been falling, with the entry and mid-tier segment the most impacted. In the first half of 2023, overall sales dropped below the 50-million-unit mark. Why are sales declining and what do we expect for the rest of the year? Mint finds out.

What is the trend now in smartphone sales?

Annual smartphone sales in India declined 6% in 2022 at 151.6 million units after a lackluster second half. The trend has continued—in the first half of 2023, shipments dropped 20% in the first quarter and another 1% in the second. With this, smartphone shipments from India have dropped for four consecutive quarters—the worst stretch in more than 10 years. It is a far cry from the record 162 million units that were shipped in 2021 as the market bounced back sharply from the covid-19 induced lull of 2020. India, nevertheless, remains the world’s second largest smartphone market after China.

Is the decline across the board?

The entry and mid-tier segments of the market, which cover phones that cost between Rs5,000 and Rs30,000, form the bulk of the market in terms of volume. This is also the category that has fallen the most. The sub-Rs10,000 segment is estimated to have declined by 12% in the first half of 2023 while the Rs10,000-Rs30,000 segment has dropped by almost a fifth. Led by increasing 5G adoption, the premium segment is growing faster than 60%. The introduction of affordable 5G smartphones, such as the one Jio is likely to launch around Diwali at a price less than Rs10,000, is likely to reverse the trend.


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What are the main reasons for sluggishness in demand?

Uncertain macroeconomic environment with high inflation, rising unemployment, low wage increases and a K-shaped recovery of the economy has forced consumers to hold on to their phones longer than ever. The inventory build-up also impacted shipments in Q1 and a rise in sales of refurbished phones has begun to impact sales of new phones as well.

What is the forecast for the rest of the year?

The festive season begins next month. The industry has lined up a number of launches. Affordable 5G devices are expected, which will expand a segment that is already seeing a good demand. Companies are also adapting to stronger offtake in offline stores. Another silver lining is that despite the tepid volumes, the average selling price of devices has gone up—revenue and profitability of the industry has improved. For the full year, sales are likely to fall short of 150 million units the industry totaled last year.

How is the industry doing globally?

Sales have declined for 24 straight months and eight consecutive quarters with the second quarter of this year witnessing an 8% drop. In 2022, sales stood at 1.2 billion units, which was the lowest since 2013. The markets that are struggling the most are the US, western Europe and Japan. The trends are largely similar with customers holding on to their phones longer. Premium phones are an outlier and like in India, there are green shoots emerging, indicating that the sluggishness may only last a few more quarters.


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