Blame the pandemic for the global chip shortage impacting several industries including smartphones, laptops, Smart TVs, automobiles, and many more since the last several months. Begun last year, at the onset of the COVID-19 pandemic, the chip shortage crisis is going to go on until late next year, predict experts.
The chip shortage has majorly impacted consumers’ pockets, especially in India. Of late, the prices of several smartphones from brands like Redmi, Oppo, Samsung, and more have increased by a minimal margin. The reason behind the price hike is none other than the global chip shortage and supply chain constraints.
Experts suggest that this is not going to end any time soon. Prices of entry-level and mid-range phones are predicted to go in the upward direction at least till the end of 2022. Premium phones are not going to be impacted as much, believe analysts.
Speaking to BGR.in, Prabhu Ram, Head of Industry Intelligence Group at CMR said, “driven by the global supply chain disruption, chip shortage, and consequent high input costs, prices of electronic goods and components are on the rise across-the-board.”
He further highlighted that “the chip shortages are more at the mid to low segment of the smartphone market, rather than the premium smartphone segment.”
IDC India’s Research Director of Client Devices & IPDS, Navkendar Singh also believes that the global chip shortage will impact the prices of smartphones, laptops, and automobiles. Singh highlights that the price hike has been “mainly due to supply challenges, use of air transport by some brands (oversea route due to unavailability of containers), fuel price etc.”
Phone manufacturers struggling
Chip shortage has been worrying most phone manufacturers. Brands like Xiaomi and Realme say that they are trying their best to offer the best prices possible for their products, but struggling due to price hikes of components such as chipsets, batteries, and more.
“The market is currently witnessing a price hike of components like chipsets, batteries, memory chips, etc. used by all smartphone manufacturers. This, in turn, affects the price of smartphones which will increase by a certain percentage,” a Xiaomi spokesperson says.
Realme’s Madhav Sheth, CEO Realme India, VP, Realme and President, Realme International Business Group also says that the industry has tried its best to absorb the pricing, yet companies need to increase the market operating prices of a few products to maintain sustainability, since none of the brands, including Realme, can absorb it all.
Budget phone category in a tussle
All in all, the ongoing global chip shortage has primarily impacted the affordable/budget price segment and not so much the premium category. Counterpoint Research’s Tarun Pathak says that the lower end/entry level segment is troubled the most.
“The shortages of components are leading to price increases, which is being transferred to consumers, especially by brands which run on lower margins. Samsung, Oppo, Xiaomi have all been affected. But Apple seems to be the most resilient,” Pathak highlights.
