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Supply shortages to hit smartphone supplies, warn makers

Samsung India smartphone sales team has been informing retailers verbally that there could be up to 70% shortfall in supplies of handsets in July due to severe shortage of semiconductor chips and components.

Supplies from brands like Apple, HP, Lenovo, Dell, Xiaomi, OnePlus and Realme too are badly affected, multiple retailers told ET.

The global chip and component shortage has intensified, affecting supplies of smartphones, laptops, smart televisions and internet-connected appliances in India once again after the industry faced the issue last year too.

Car makers too are feeling the pinch and the shortage is hindering them from scaling up production leading to production loss of 10-15% that could continue for next two quarters, three industry executives said.

This comes at a time when retailers and companies said they are reporting brisk revival in sales across categories after states eased lockdowns last month.

Several vehicle makers, such as Ford, have either shut the India plant temporarily or adjusted the production plan due to the shortage.

Hyundai has been utilising the chipsets meant for smaller cars in bigger vehicles, while Mahindra & Mahindra and

have produced vehicles without chipsets and have installed them either in the stockyard or dealerships intermittently in the last couple of quarters to ensure quicker delivery to consumers.

Tata Motors’ marquee brands, Jaguar Land Rover, said this week that it is expected to take a knock of one lakh units in just two quarters, pulling the company into the red. Back home, the company is struggling with the shortage with all models having a waiting period of two to 10 weeks.

Shailesh Chandra, president of passenger vehicle business at Tata Motors, said while the demand side is on a progressive recovery path, the industry continues to see uncertainty on account of global semiconductor shortage and rising commodity prices.

The shortage of chips and components has increased due to the recent rise in Covid cases in Taiwan and Vietnam, which are key production markets accounting for over half of the global production, and drought in Taiwan considering a lot of water is used in manufacturing.

Smartphone maker Realme India and Europe CEO Madhav Sheth said the company can meet 80% of the demand. “We are working with industry suppliers and partners closely to resolve stock issues and meet pent-up demand. We are confident to have enough stock for the upcoming festive season,” he said.

“Supply is patchy across the board – smartphones, home appliances, laptops, televisions, everywhere,” says Ritesh Ghosal, chief of marketing at Tata-owned electronics retail chain Croma. He says the retailer is losing significant sales due to the shortage, with sales growing at 50% in laptops and over 100% in tablets as compared to last year despite the shortage.

Ghosal said there has been an unforeseen increase in demand and conservative forecasting by manufacturers and retailers so that they don’t lock their capital into inventory due to uncertainties adding further to the shortage.

Rival chain Vijay Sales director Nilesh Gupta said not all models are available and there are instances when laptop and tablet brands get completely out of stock. He, however, says the silver lining is when one brand gets stocked out, some other brand is available.

South India’s largest cellphone retail chain Sangeetha Mobiles director Chandu Reddy said some brands have informed that supplies will be extremely limited in July, with top selling model supplies extremely low.

Most brands and retailers have said sales grew by 10-15% year-on-year in the markets which opened last month and the momentum is building.

A Xiaomi spokesperson said due to the pandemic, there was a shortage across the supply chain over the last one year. With the lockdown restrictions easing out, the company is optimistic that the supply chain will pick up pace, while it is also expanding local manufacturing capabilities.

Neeraj Bahl, MD of BSH Household Appliances India, which sells Bosch and Siemens range, said the global parent has informed that there will be a supply shortage of connected dishwashers and built-in appliances.

Ravi Bhatia, president at the consultancy firm JATO Dynamics India, said the problem was acute. Indian manufacturers are especially facing a challenge for supply of high-end trims, he said.

“These trims with advanced infotainment and in cabin convenience features. The revenue and profit contribution of these variants have grown in recent times. The shortage will therefore hit the bottom line,” said Bhatia.

Industry executives said the higher the content of semiconductor in a car, the longer the waiting period.

Emails sent to Samsung, Apple, HP, Dell, Lenovo and OnePlus remained unanswered. Business Journal

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