Samsung India is reportedly planning to exit the feature phone business in the country owing to not enough demand or yields. The report comes from ET Telecom and claims the last batch of feature phones made for the Indian market will be in the month of December. Now, if you want to know what could have made the Korean chaebol decide so, read on for the probable causes.
Dwindling yields for Samsung in the feature phone market
In Q1 2022, the overall basic phone shipments have dropped 39-per cent (on year) according to Counterpoint Research. This is apparently due to a supply crunch, high inventory levels, and an inflation-induced decline in demand.
Coming to Samsung, it fell down to the third spot with a 12-per cent share, behind Itel (21-per cent) and Lava (20-percent).
Counterpoint Research also notes that at the end of March, Samsung’s entire quarterly shipment was 1-per cent in value and 20-per cent in volume.
Now, this is not all. There’s one more vector to cover.
Govt. of India’s PLI Limit
The Government of India’s PLI (Performance Linked Incentive) scheme has a mandate which offers sops only on manufacturing phones costing more than Rs. 15,000 (factory price). So, no concession if you make handsets below that. You are incentivized to only make phones above ₹15k in India.
There’s also the case of rising selling prices of phones in the ₹10-20K price bracket owing to traction in terms of volume.
This could also be part of the problem Samsung is currently in.
The sources with knowledge of the matter have told ET, “Samsung has spoken to channel partners and said they will exit the India feature phone business in the next few months or by this year's end". This contract partner in question is believed to be Dixon.
It could then channel its efforts toward the rewarding higher-end smartphone business. In March, it had garnered a 22% share thanks, especially thanks to its performance in the 5G phone market. In fact, it has been topping the charts for two quarters in a row.
Now, while Samsung may stop selling feature phones in India, it may still make the phones in the country to meet the export demands. As per government records, the total feature phone exports from us to the foreign markets like Latin America and Africa was Rs. 1,496 crores in FY21, which was a 621-per cent surge from the previous year.
We will be keeping a close eye on the developments of this news. So, stay tuned.
As for other news, reviews, feature stories, buying guides, and everything else tech-related, keep reading Digit.in.
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