Coronavirus lockdown: Handset cos unsure to reopen, given the labour issues, excess stock and weak demand

New Delhi | Bengaluru: Handset and component manufactures say they are allowed to restart production from April 20 but are unsure if they will do so and at what capacity, given the labour supply issues, existing excess stock in the retail channels and weak demand with offline retail still shut.

Market watchers say handset companies may start with just 15-20% of their capacity, if at all.

“Manufacturing of all types can restart in rural areas and manufacturing of IT hardware, which include mobile devices including components, within municipalities can also be restarted from April 20,” Pankaj Mohindroo, chairman, India Cellular and Electronics Association (ICEA), told ET.

As per government data, India has around 270 factories making handsets and components.

“Servicing of IT products has been permitted largely by self-employed, which will cover probably 90% of the universe,” Mohindroo said. ICEA represents handset brands like Apple, Xiaomi, Oppo, Vivo, Lava, besides world’s leading contract manufacturers including Foxconn and Wistron.

Handset Cos Mull Over Greenlight

A spokesperson for China’s Xiaomi, India’s top handset brand which makes its phones primarily through Foxconn, said that it is evaluating all possibilities. Executives at major Chinese smartphone makers Oppo and Vivo said that they were in touch with authorities on future steps. Analysts said that handset makers will certainly find it difficult to start their factories with migrant workers likely to be slow in returning to their jobs, especially in northern India, which houses factories of Oppo, Vivo and Samsung. Oppo, Vivo and Samsung did not respond to ET queries.

“As per our estimates, handset players will only start with 15-20% capacity, but they need to resolve the sales challenge since offline is 60% of the market and there is zero sales due to the lockdown,” Tarun Pathak, associate director at Counterpoint Research, said.

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