Daily Management Review

Coronavirus: Supply Disruptions Fears For Indian Smartphone Makers


Smartphone production in India could get disrupted is the impact of the deadly coronavirus outbreak in China drags into February, said industry executives in India. This is because of the travel bans and lockdown of cities in China that could cause delays in shipment of components.
This is important for India because it is the largest smartphone market of the world after China. However production in the country is still significantly dependent on supply chains in China. Parts such as cells, display panels, camera modules and printed circuit boards are imported regularly by smartphone makers in India.
While Apple phones in India are manufactured by Taiwan's Foxconn and Wistron, the Taiwanese vendor also uses its Indian manufacturing plant to make smartphones for China's Xiaomi. South Korea's Samsung and China's OnePlus are among the other major smartphone makers in India.
The impact of the coronavirus have so far been weathered by smartphone makers in India even as the deadly virus has killed more than 200 people in China as of Friday. The Indian smartphone makers had ramped up inventories of Chinese-made parts irrespective of the virus outbreak to prepare for the shutdown of Chinese factories due to the Lunar New Year holiday period.
"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, the co-founder of homegrown smartphone maker Lava. "We're definitely worried about it."
Rai said while markets such as South Korea, Vietnam or Taiwan can be utilized for importing some of the components, it is used only as a last resort because of the need of smartphone companies making changes such as in design and software.
The Indian operations of China's OnePlus can be managed in the short term, the company said.
"We are well covered because we have the entire production in India, we already have enough stock, and even going forward many of the components will anyway be coming directly from other markets," said Vikas Agarwal, the India head of OnePlus.
A number of global companies such as Alphabet Inc's Google and Sweden's IKEA have temporarily closed operations in China even though the Chinese authorities have expressed confidence that they would be able to defeat the "devil" virus.
Worry over the coronavirus spread and the possibility of it hitting its profits was also expressed by India's Tata Motors, for which China is one of the major markets for its luxury Jaguar Land Rover cars.
According to reports quoting an executive at another foreign-owned smartphone maker, who did not wish to be named, the movement of technical staff from China – such as on-site support executives, machine and automation specialists, has been hampered because of suspension of flights by several airlines to and from China. That will also hit the Indian smartphone making business.
The industry therefore is hoping that the situation in China will be managed within the next couple of 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, an industry lobby group.