NEW DELHI : The lockdown of China’s Shenzhen tech hub following a new wave of coronavirus cases could inflate prices for TVs, laptops and smartphones, given the region is one of the biggest providers of electronic products in the world.
About 20 to 50 percent of India’s electronic component supply comes from China, with Shenzhen accounting for a large portion, said Navkendar Singh, research director at the International Data Corporation (IDC). “If we see another round of disruption or if the planned easing doesn’t happen, we will definitely see price hikes between brands. And no, most won’t be able to absorb the hike; it will be passed on to the consumer,” he added.
Singh said if the lockdown in Shenzhen city lasts for three weeks or more, it will impact smartphone and personal computer shipments in the second half of the June quarter as well as the September quarter.
Tarun Pathak, research director at Counterpoint Research, confirmed that prices will start to rise if the lockdown extends beyond March 20. He added that smartphone prices could increase by 5-7%.
Experts also pointed out that component prices and freight rates have remained high over the past year, meaning most brands may not be able to absorb the latest cost pressure and will have to pass it on to the buyers. “Brands will pass this on to consumers if this is prolonged, as there is already cost pressure from component shortages,” Pathak said.
According to Sanchit Vir Gogia, chief analyst at Greyhound Research, while the extent of the impact will depend on how long the lockdown lasts, customers could be looking at a 20-30% increase. “If the supply chain issue is resolved in the next quarter, we can expect an increase of around 10-15%,” he said. all these brands already, and the same should continue at least until the end of this year.
Arjun Bajaaj, director of Videotex International, which manufactures TVs under the Daiwa brand, said prices for raw materials such as high impact polystyrene (HIPS), acrylonitrile butadiene styrene (ABS) and copper had risen. HIPS and ABS are used for electronic enclosures, while copper is a conductive material. The Russian-Ukrainian war also drove up the prices of neon and palladium, two important components in the semiconductor supply chain.
That said, the current quarter is traditionally a time of low product supply for brands due to the New Year holidays in China. Many phone brands announce new products in February and March and these products begin to enter the retail market around this time. Bajaaj pointed out that while some brands will have stock for 1-1.5 months, the new lockdown may delay product supply.
“If the lockdown is prolonged, the industry will suffer the consequences, with supply chain disruption leading to slower production and a delay in the final product, all because India depends on China for the raw materials,” Bajaaj added.
He expects TV prices to rise 7-10% due to covid-related disruptions in Shenzhen.
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