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Insights Tag: Local Manufacturing

Consumption of Indian Semiconductor Components to Climb to $300-Billion Cumulative Revenue During 2021-2026

  • Mobile and wearables, IT and industrial segments currently contribute around 80% of the semiconductor revenues in India.
  • ‘Make in India’ and Production Linked Incentive schemes will boost local sourcing of semi-components in the coming years.
  • Further policy reforms and building of a semiconductor ecosystem will reduce reliance on imports going forward.

New Delhi, Seoul, San Diego, Buenos Aires, London, Hong Kong, Beijing – August 16, 2022

India’s semiconductor component market will see its cumulative revenues climb to $300 billion during 2021-2026, according to the ‘India Semiconductor Market Report, 2019-2026’, a joint research by the India Electronics & Semiconductor Association (IESA) and Counterpoint Research. IESA is the premier industry body representing the ESDM and intelligent electronics industry in India. It acts as a trusted knowledge partner to the central and state governments, helping devise policies and incentives for the industry to attract investments into India. The comprehensive research on India’s semiconductor market focuses on the bottom-up modelling unit as well as revenue demand for semiconductor components covering the entire Bill of Materials (BoM) of multiple end-device and equipment categories across seven major sectors in India – Mobile and Wearables, Information Technology, Automotive, Industrial, Telecom, Aerospace and Defence, and Consumer Electronics – from domestic consumption as well as export perspective. The report provides detailed recommendations, potential policies and a framework for building a robust domestic semiconductor ecosystem to boost local production and sourcing.

India Semiconductor Market Dashboard, 2021-2026
Source: India Semiconductor Market Report

 

IESA CEO and President Krishna Moorthy said, “Before the end of this decade, there will be nothing that will not be touched by electronics and the ubiquitous ‘chip’. Be it fighting carbon emissions, renewable energy, food safety, or healthcare, the semiconductor chip will be all-pervasive. Imagine this – all children all over India get educated in virtual classrooms by the country’s best teachers. The chip makes it possible. Again, imagine everyone in the country gets quality healthcare and diagnostics done remotely. Medicines are delivered by drones at your doorstep, even in the farthest villages of India. The chip will make it possible, and we will see this in front of our eyes very soon. Let us make India the semiconductor nation.”

 

India is poised to be the second largest market in the world from the perspective of scale and growing demand for semiconductor components across several industries and applications. This demand is being pushed by the increasing pace of digital transformation among the country’s consumers, enterprises and public sector through the adoption of new technologies, from advanced connectivity to content consumption to the cloud. These cover smartphones, PCs, wearables, cloud data centers, Industry 4.0 applications, IoT, smart mobility, and advanced telecom and public utility infrastructure.

 

Mobile and wearables, IT and industrial sectors alone contributed to almost 80% of the semiconductor revenues in India in 2021. Commenting on the mobile and wearables industry, Research Director at Counterpoint Research Tarun Pathak said, “The mobile and wearables sector was the biggest contributor to India’s semiconductor industry in 2021. Mobile devices have become a primary tool for internet connectivity given that broadband and laptop/PC penetration remains low. In the last five years, the ‘consumer digital transformation’ has accelerated with the availability of cheap mobile internet, and mobile devices have connected a big part of the Indian population. Also, the gradual shift from feature phones to smartphones has been generating increased proportions of advanced logic processors, memory, integrated controllers, sensors and other components. This will continue to drive the value of the semiconductor content in smartphones, which is still an under-penetrated segment in India, aided by the rise of wearables such as smartwatch and TWS.”

 

 

 

 

 

Commenting on the potential opportunity in the mid-to-long term, Counterpoint Research Vice President Neil Shah said, “The next big boom for semiconductor components will come from across sectors. However, the telecom sector with the advent of 5G and fiber network rollout will be a key catalyst in boosting the semiconductor components consumption. This consumption will not only come from the advanced semiconductor-heavy 5G and FTTH network infrastructure equipment, which will contribute to more than 14% of the total semiconductor consumption in 2026, but also from the highly capable AI-driven 5G endpoints, from smartphones, tablets, PCs, connected cars, industrial robotics to private networks. Also, ongoing efforts to embrace cleaner and greener vehicles (electric vehicles) will provide an impetus for the automobile industry to adopt advanced technologies, which in turn will boost the demand for semiconductor components in India. Consumer electronics, industrial, and mobile and wearables will be the other key industries for the growth of the semiconductor market in India. Further, this semiconductor demand will not only be driven by domestic consumption but also by the growing share of exports.”

In 2021, India’s end equipment market stood at $119 billion in terms of revenue. It is expected to grow at a CAGR of 19% from 2021 to 2026. The Electronic System Design and Manufacturing (ESDM) sector in India will play a major role in the country’s overall growth, from sourcing components to design manufacturing. The semiconductor industry in India is on a path to immense growth over the next few years to help India’s economy reach the next stage for both domestic consumption and exports. While the country is becoming one of the largest consumers of electronic and semiconductor components, most components are imported, offering limited economic opportunities for the country. Currently, only 9% of this semiconductor requirement is met locally.

The demand for semiconductors is growing astronomically worldwide. However, multiple factors, including the pandemic and global geopolitical events, have heavily impacted the manufacturing of the components. This research is aimed at analyzing the market situation, manufacturing supply chain, and prospects for India as a premier manufacturing destination not only for finished goods but also for semiconductor components. While the local production is currently low, India has immense potential to become a leading semiconductor component supplier in the coming years, provided the talent pool and resources are utilized correctly. The government’s initiatives, from ‘Make in India’ to Production Linked Incentive (PLI), will help accelerate this journey but will need some additional reforms to increase local manufacturing and sourcing of semiconductor components. If this is done, the semiconductor market can be a major contributor to economic growth, and India’s push to become a $5-trillion economy.

 

IESA Vice President Sunil G Acharya said, “Semiconductors will be inside everything intelligent. India is becoming a tech-centered growth story with advancing technologies and innovation being integral to democratizing access. The semiconductor study will play a major role in India’s growth. A large young population combined with an increased focus on digitalization, advancing skill levels, growing manufacturing and foreign investment traction will take India’s semiconductor industry to the next level in the coming years.”

 

 

Commenting on the current stage of local manufacturing, Research Analyst at Counterpoint Research Shivani Parashar said, “To achieve India’s semiconductor vision, a robust and indigenous technology ecosystem will be required to build on the existing policy foundation through PLI-like schemes. Renewed focus is needed for incentivizing the country’s design ecosystem in a manner that helps create a stronger foundation for design-led manufacturing and allied sectors, be it for local consumption or exports. This strategy will transform the landscape in the coming years to drive local sourcing trends. The share of local sourcing is expected to grow to over 17% by 2026. This translates into a six-fold rise in potential locally-sourced semiconductor revenues.”

IESA Vice President (Public Policy, Government and Corporate Relations) Anurag Awasthi said, “From safety razors to space shuttles, everything will be powered by the chip. Let us ensure our chips are not down in the world of tomorrow! Keeping this as an aim, MeitY is working further towards making India one of the next technology powerhouses, especially in a pandemic-struck world where there has been a realization of the need for more flexible and diverse supply chain ecosystems. The government is keen to leverage India’s existing strengths in mobile manufacturing, software and start-up hubs for other critical industries in the ESDM sector.”

 

Research Analyst at Counterpoint Research Priya Joseph added, “Government policies including PLI, New Electronics Policy, 2019, Electronics Manufacturing Clusters, and Scheme for Promotion of manufacturing of Electronic Components and Semiconductors (SPECS) are all being equipped to boost domestic design, manufacturing and assembly. To help drive more initiatives under the themes of Make in India and Digital India, the government, in its last budget, pushed the total allocation to $936.2 million. This step not only aims to incentivize India-based manufacturing but also catalyze investments in the sector to support job creation, ease of doing business, import reduction and export promotion.”

To access the full report, please contact IESA at the coordinates below.

Vine Sophia Email: sophia@iesaonline.org

Feel free to contact us at press(at)counterpointresearch.com for questions regarding semiconductor research and insights.

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media, and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects, and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts:

Shivani Parashar

 

Neil Shah

Tarun Pathak

Priya Joseph

 

Counterpoint Research

press(at)counterpointresearch.com

Related Reports:

Podcast: US, India Look to Reshape Manufacturing Landscape

The geopolitical tensions between the US and China disrupted supply chains after sanctions against ZTE and Huawei. The global pandemic and lockdown restrictions further added to the woes, creating a supply-demand imbalance along with other challenges. As smartphone and PC makers, automobile companies and other businesses heavily rely on Taiwan, South Korea and China for critical components and manufacturing, there is a risk in having such a consolidated supply chain.

Manufacturers are now looking to diversify their supply chains to ensure events like COVID-19, natural disasters and geopolitical tensions don’t cause disruption. To encourage domestic manufacturers to increase production, the Indian government has introduced the Performance Linked Incentive (PLI) scheme. It offers incentives to companies for increasing domestic production and reducing import bills. With this scheme, the government is also trying to position India as a critical electronics manufacturing hub.

The ongoing semiconductor shortage has also convinced the US that it too heavily relies on foreign manufacturing for domestic semiconductor needs. To overcome the issue and also protect its economy, the US government has also taken a similar approach as India to leverage its technological prowess in AI, semiconductor design, and more. It will be offering subsidies of up to $52 billion for chip manufacturing in the US.

In the latest episode of ‘The Counterpoint Podcast’, host Maurice Klaehne is joined by research analyst Priya Joseph and research associate Matthew Orf to discuss how geopolitical tensions have disrupted global supply chains. The discussion focuses on India’s PLI scheme where Priya talks about its framework, major companies that are participating, and more. Matthew, on the other hand, talks about the Biden administration’s efforts to review the supply chains for critical products, such as semiconductors, and touches upon the US Innovation and Competition Act of 2021 that was passed by the Senate recently.

Hit the play button to listen to the podcast

Read the podcast transcript here.

Podcast Chapter Markers

1:37: What convinced the Indian government to introduce a scheme like PLI?

3:32: Is PLI restricted to any sector?

4:17: Which are the major companies participating in the scheme?

5:36: The US government is also encouraging the domestic manufacturing of semiconductors. Is it like the PLI scheme or different?

8:15: President Biden recently issued an executive order to review supply chains. Can you tell us more about it?

11:52: Has component shortage affected PLI or its participants?

13:57: There is a possibility of a third wave of COVID-19 coming to India. So, what are the challenges PLI could face with that?

17:02: The US Senate recently passed the US Innovation and Competition Act. How will it help the US fulfill its ambitions of self-sufficiency?

Also available for listening/download on:

      

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  1. Efforts to Diversify Semiconductor Supply Chain Gather Pace
  2. India’s PLI Push Paves New Path
  3. Industry 4.0 Offers a Silver Lining to the Pandemic Cloud
  4. Seemingly Hasty, but Prudent TSMC's New Fab Plan in the U.S.
  5. TSMC Caught in the Crossfire as US Renews Focus on Huawei
  6. The United States Innovation and Competition Act and the Return of US Industrial Policy
  7. When the Chips are Down: Governments Move to Address Shortage
  8. Why Tech Should Follow Geopolitics in 2021

India’s PLI Push Paves New Path

Who would have ever known that a scheme introduced to drive the Indian government’s dream of making the country an electronics manufacturing hub would become so successful that it would be extended to other sectors? Within a year of its implementation, the Production Linked Incentive (PLI) scheme has proved to be a roaring success. It is easily the government’s best foot forward so far for the manufacturing industry. Now, this scheme also covers the white goods, telecom equipment, solar modules and many other sectors.

Government’s ‘Self-reliant’ Vision

Launched under the ‘Aatmanirbhar Bharat’ (Self-reliant India) initiative, PLI is one of the three main schemes announced by the government after the Scheme for Promotion of manufacturing of Electronic Components and Semiconductors (SPECS) and the Electronics Manufacturing Clusters (EMC 2.0). These schemes came into being to encourage large mobile phone and component manufacturers to invest in the country. Unlike earlier schemes which were input-based and mostly relied on capital subsidy or funding assistance (like the M SIPS and EMC schemes), PLI is output-oriented.

PLI Scheme

PLI Scheme Analysis

The PLI scheme is indicative of the government’s strong intention towards becoming self-reliant. What makes it even more relevant is its timing of introduction. There is no denying that the onset of COVID-19 has only ripped open the overdependence of the supply chain ecosystem on one single market.

Considering the above, did this realisation came in a little late? Maybe yes. Why? Because in order to build a successfully working nucleus around the manufacturing ecosystem, expecting overnight results is unrealistic. At a time when India is undergoing the crisis caused by the second wave of COVID-19, handset manufacturers are already predicting their inability/delays in meeting the desired targets and investments under PLI for FY21 (India’s government follows April-March financial year). The scheme which was considered to be a game changer in its early days is now showing signs of falling apart in its goals unless the government decides to intervene and makes relevant regulatory changes. Given the uncertainties surrounding the manufacturing ecosystem, even participants as big as Foxconn and Wistron have now decided to cut production by almost half. But all this should be considered as a part of the evolutionary stages that a scheme passes through.

 India’s 25 Years of Mobile Journey

Mobile Phone Industry Journey in India
India’s Mobile Journey

PLI Potential and India’s Economic Resilience

As global participants of the PLI scheme, be it Foxconn, Samsung or Wistron, pledge to lead a total production of more than INR 10,50,000 crore (INR 10,500 billion) in the country, we expect a significant increase in India’s manufacturing capacity over the next five years. Increase in export potential, which also forms one of the major driving forces of the PLI scheme, is also seeing exponential growth. As much as 60% of the production target under the scheme is expected to be contributed by exports of the order of INR 6,50,000 crore (INR 6,500 billion).

Such promising participation is also leading the country towards the goal of domestic value-addition, which is projected to grow from the current 15-20% to 35-40% in the case of mobile phones and 45-50% for electronic components. Capitalizing on these projections, India has already come out as a resilient economy amid the global pandemic and trade shocks. Official statistics suggest India’s cumulative value of exports (merchandise and services) during April-March FY21 stood at $493.19 billion compared to $528.37 billion during April-March FY20. Indeed, factors like improvement in ease of doing business, creation of plug-and-play investment and manufacturing environment, and launch of PLI scheme across various sectors have played an important role in helping India recover from the downturn due to COVID-19.

Disabilities With and Beyond PLI

Even as PLI promises to make India competitive in the global market, a need is being acutely felt to minimize the cost of disabilities still faced by the sector. For example, India’s Special Economic Zones (SEZs) have a major role in electronics manufacturing. SEZs allow for a faster setting up of manufacturing plants and duty-free imports of capital machinery and components for them. However, the sale of finished goods from these SEZs in the Indian market is treated on a par with the export of the same products to India. This places SEZs at a disadvantage since they end up attracting customs duties. Therefore, a policy optimization is required for such a distinction between domestic and SEZ produce.

The cost of disabilities incurred by manufacturers is not only restricted to schemes like PLI but also at the central and state levels, like land and labour subsidies, interest on working capital, land rental, high capital cost, power, logistics and insufficient R&D. Such issues have to be jointly addressed yet independently handled by the central and state governments.

Momentum of PLI and Conclusion

Given PLI’s momentum in the mobile phone and electronics sectors and subsequently in other ‘sunrise’ sectors, the government stands on safe ground to achieve its vision of making India an export-based manufacturing hub and a preferred alternative in the China Plus One strategy. India’s business ecosystem is gaining traction with the growing presence of global manufacturers, and changes in export policies with the formulation of schemes like the Remission of Duties and Taxes on Export Products (RoDTEP) and the Import of Goods at Concessional Rate of duty (IGCR Rules).

One may say that a scheme like PLI and its focus on export-oriented measures is a far-fetched goal in a post-pandemic world. But as we observe other economies reviving on newer resilient strategies, India too has a lot to benefit from, be it in terms of more production, large companies, technology upgradation or even employment opportunities.

COVID-19 Overwhelming Impact on LATAM Smartphone Market

While the virus outbreak hit China the worst during February reducing the Chinese offline market by 50% and the global market by 14%, the LATAM market did not fall at all. This is because most operators and retailers already had stock piled inventory, in January, before the Chinese New Year.

However, the scene changed drastically in March. Following the arriving of the first cases of COVID-19 in the region, the feeling changed, more or less, overnight. The outbreak will impact the LATAM economy greatly, with the smartphone market being part of the collateral damage. The impact will be both on demand and supply. But in LATAM, demand will have the larger impact on the market.

Impact on Supply

Brazil was the first country to feel the supply shortage. In Q4 2019, 94% of smartphones shipped in Brazil were manufactured locally. During the first week of March, 70% of manufacturers reported having some impact from the lack of components from China. But by the beginning of March, China resumed shipments of components and sub-assemblies, allowing manufacturing to start recovering. A full recovery is estimated to take around two months.

Exhibit1: LATAM Smartphone Shipment Origin (Q4 2019)

Counterpoint LATAM Smartphone Shipment Origin (Q4 2019)
Source: Counterpoint Research Market Monitor Q4 2019

For the rest of LATAM, shipment and sales of smartphones continued as usual until March. This is because operators and retailers already had inventory to last until March. Some shipments from China were decreasing through most of 2019. A few brands have shifted part of their production to Vietnam, and in the latter part of 2019, they accounted for 8% of LATAM sales. Shipment from Vietnam was only slightly affected during February.

Brands that have manufacturing source in Wuhan, such as Motorola, were among the most affected. Another side effect of this crisis will be an increasing brand concentration. Operators and retailers are already asking for better terms of payment, and only the big brands can offer them.

Impact on Demand

First cases of COVID-19 emerged, around the beginning of March, in various countries in LATAM. It was mostly dismissed as imported cases, and they would not spread. Cases in LATAM, were mostly imported from Europe. As the region has strong links with the old continent. At the same time, news about Italy and Spain’s high death toll, as a result of not ordering early quarantine, started to appear in the media. So local governments started to look for a way to cope with the upcoming crisis.

Most LATAM countries have either partial or total quarantine until mid-April, although many countries will likely extend it until the end of April. The degree of lockdown varies among different countries. Despite of the type of lockdown decreed by the government, all operators stores, retailers and shopping malls are closed. After the end date, provided new infections are moderating, there may be a shift to a partial lockdown.

 

Exhibit2: LATAM Main Market Lockdown Schedule
Counterpoint LATAM Main Market Lockdown Schedule

The duration of the lockdown has a direct correlation with the decline of the economy. Governments are all weighing between the health crisis and the recession. Brazil does not have a central government lockdown. Moreover, President Bolsonaro has said that he does not endorse strict quarantine. He said that the effect of not working can be worse than the disease. He has been calling the governors to stop the lockdown after Easter weekend.

The impact on the demand will have two different phases, during lockdown and post lockdown. During the lockdown, demand will free fall. It will plunge to close to zero, with all mobile device retail outlet closed. Lockdown in LATAM means that individuals are banned to roam freely, except to purchase food or other basic goods. This is strictly enforced by the police and the military. Only workers from service associated with food, health and security are allowed to roam in the street.

Online sales surged, but it only benefit what is in the list of essentials, such as food and pharmacy. In many countries, such as Argentina, delivery of mobile device is considered non-essential, therefore is not permitted.

The second phase is the post lockdown, which most countries in LATAM will enter in deep recession. ECLAC (Economic Commission for Latin America and the Caribbean) has indicated that the regional GDP will contract by at least -1.8%. “Although a contraction of -3% and -4%, or even more cannot be ruled out” it says. Unemployment will rise by at least another 10%. Formal and informal workers will lose their job. So, demand will take most of 2020 to reset.

After analyzing the impact of smartphones sales, from both the supply and the demand side, the smartphone market will likely contract by -22% YoY in 2020. The worst decline will take place between Q2 and Q3 of this year. The market ASP will also decrease as the economic conditions might force people to replace the current smartphone with a cheaper device.

Brazil and Chile smartphone sales will experience the smallest impact. Whereas Argentina and Mexico will suffer the highest impact. Although Argentina’s smartphone market was already contracting, it will decrease even more. Colombia and Peru sales will drop somewhere in between.

The demand for refurb devices will likely rise, but this would depend on the ability of the refurbishing companies to offer desired smartphone models and whether the users feel that they are getting good value for money.

In previous economic crises the mobile handset market has proven to be more resilient than the economy. Smartphone has become a basic good, especially in the time of home office, homeschooling and social distancing.

Impact of Rising Import Duties on Bangladesh’s Handset Market

The handset industry in Bangladesh has scaled rapidly over the last decade with 160.8 million total mobile subscribers at the end of May 2019. Bangladesh MNOs continue to register growth, riding high on rising digitization throughout the country. Grameenphone led the mobile subscriber market with 74.78 million users followed by Robi Axiata with 47.69 million customers in May.

During 2017-18, the Bangladesh government first offered some tax benefits to local assemblers and increased import duties. This was followed by further revisions to the import duty structure with the supplementary duty raised to 10 percent from 5 percent.

Local assemblers termed it a prudent decision that would help their industry to grow. Currently the total tax on imported handsets is 32 percent, which will rise to over 50 percent. In contrast, locally assembled handsets bear about 17 percent in taxes. For handsets fully manufactured in Bangladesh, the tax is just 5 percent. To obtain the tax benefit, five local and international brands have already started assembling mobile devices, catering to about 30 percent of the country’s annual demand for 35 million handsets. This will have an impact on the following areas:

  • Smartphone imports will be costlier

Currently the total tax on imported handsets is 32 percent – rising to over 50 percent. There are more than 90 million active internet connections in the country of which about 95 percent are accessing from a mobile phone. If smartphone costs increase, it will likely hinder the government’s digital Bangladesh vision.

  • Increase in Local manufacturing

The government is trying to promote local assembly of smartphones. A surge in demand for affordable smartphones has focused minds on the business opportunity in Bangladesh. At present five plants have launched, and they are assembling about 30 percent of the country’s total yearly demand. The tax on semi-knocked down (SKD) phones is about 17 percent. For completely knocked down (CKD) it is about 5 percent.

The target is to reduce import volumes and to cater to the local market, after which export opportunities will be explored. Local manufacturing and assembling of phones will further bolster replacement of feature phones by smartphones. Many of the locally manufactured and assembled phones are much cheaper compared to the imported models.

  • Boost illegal mobile imports

Not everyone is assembling locally and to get past the duty some brands will start importing illegally. This will have a negative impact on the industry. At present, illegal imports account for 15 to 20 percent of the market. While there has always been a notable presence of illegally imported handsets in the market, the trend has gathered pace in recent years. Such a high import duty ultimately increases the prices of legally imported phones while making the illegal shipments a more viable option. The resulting burden on the sector trickles down to the consumer, hampers growth and draws the country further away from the goals of Digital Bangladesh.

If the intent is to uplift and grow the sector and ensure that millions more Bangladeshi citizens can access digital services, then the tax proposals mentioned above need to be reconsidered and applied gradually. The manufacturing ecosystem is not robust. The poorest consumers, for whom mobile access could deliver the greatest benefits, are likely to be most negatively affected by these proposals. The increase in the minimum tax on turnover of mobile companies who were still not profitable will only add to their burden and discourage shareholders investing further in the market. The rise of local manufacturing and assembling of smartphones and subsequent availability of cheaper alternatives is reducing Bangladesh’s dependency on imports, but it will take some time as imports are the main source for meeting local demand.

Smartphone Market in Bangladesh Grew 45% YoY in Q1 2019

Samsung took the first position from Symphony in Bangladesh smartphone market, grabbing a 22% market share.

LTE capable smartphones grew 117% YoY during Q1 2019.

     Seoul, Hong Kong, New Delhi, Beijing, London, Buenos Aires, San Diego

May 30th, 2019

The smartphone market in Bangladesh grew 45% year-on-year (YoY) during Q1 2019, according to the latest research from Counterpoint’s Market Monitor Service. This was due to the increase in the availability of locally manufactured devices. The volume of locally manufactured devices increased by 29% quarter-on-quarter (QoQ), and they now make up for 41% of Bangladesh’s smartphone market.

Commenting on the performance of various brands, Karn Chauhan, Research Analyst at Counterpoint Research, said, “Local brands in Bangladesh had a 39% market share in Q1 2019. Among the local brands, Maximus showed a huge growth of 793% YoY, driven by its affordable offerings in the US$25-US$75 price band. Maximus D7 was the second best selling model in Q1 2019, after Samsung Galaxy J2 Core. On the other hand, Chinese brands grew 38% YoY, grabbing a 33% market share, which was largely driven by the growth of Huawei, Xiaomi, OPPO, and vivo, which contributed to 65% of the overall shipments of  Chinese brands.”

Commenting on Bangladesh market, Abhishek Choudhary, Research Associate at Counterpoint Research, said, “Locally made handsets are proving to be a success. Prices of locally assembled devices are lower than that of the imported ones. Also, the defect ratio of the latest locally manufactured devices has also come down sharply in comparison to the earlier ones. Clearly, the government’s efforts to promote local manufacturing has been successful. In a highly competitive market, locally made handsets are giving stiff competition to imports.”

In terms of brands, Samsung was the clear leader. Samsung’s shipments grew 203% YoY, helping it capture the top spot for the first time in Bangladesh. It’s market share stood at 22%, while the former market leader, Symphony only had a 16% market share. Symphony, the former market leader, is now the second best selling smartphone brand in Bangladesh. New launches and boost in the local manufacturing were the reason behind Samsung’s growth. The Samsung Galaxy J2 Core was its top model. Expanding its portfolio also helped Samsung, as the newly introduced A-series smartphones dominated their respective price bands.

Transsion did well driven by strong shipments of iTel in sub $75 segment.A33 Android Go edition remained popular. As it scales up its local assembling, Transsion is looking forward to grow its market share with multiple brand strategy (iTel, Tecno and Infinix)

Xiaomi’s smartphone shipments grew 165% YoY. The brand had a 7% market share and was among the top five smartphone brands during Q1 2019. vivo grew at a stunning 1,133% YoY with new launches such as Y91C, Y91i. Huawei witnessed a resurgence in shipments, which grew 7% QoQ due to its Y series models. Huawei also offered discounts to customers purchasing handsets from Huawei-authorized outlets. Customers buying smartphones from Robishop (an e-commerce platform from Telecom Operator Robi Axiata Limited) could also get the Robi and Airtel bundle.

Even the local brands of Bangladesh had a strong performance during Q1 2019. Symphony, Walton and Maximus were part of the top five local smartphone brands by market share.

With the advent of 4G services, shipments of LTE capable smartphones grew 117% YoY. The availability of LTE capable smartphones is constantly increasing. Samsung alone contributed to 34% of the total LTE capable device shipments, followed by Xiaomi with an 11% share.

In terms of system-on-a-chip (SoC) vendors, MediaTek is the leader with a 54% market share, followed by Qualcomm at 15%. Qualcomm powered smartphone shipments grew 116% YoY, largely driven by Samsung, Xiaomi, OPPO, vivo, and Huawei. Samsung contributed 36% of shipments of  Qualcomm powered chipsets, followed by Xiaomi, which contributed 33%.

Exhibit 1: Bangladesh Smartphone Market Share – Q1 2019

 Source: Counterpoint Research Market Monitor

Market summary:

  • Symphony ranked second in the market share rankings, with a decline in sales of best-selling V98. Shipments declined 19% QoQ but registered 2% YoY growth.
  • The US$75-US$100 price band grew 74% QoQ, driven by the Samsung Galaxy J2 Core.
  • Shipments of phones with a primary camera of 15.00-19.99 megapixel (MP) grew 203% QoQ, driven by Samsung’s models. Samsung Galaxy A30 grabbed a 79% shipment share in this segment.
  • Shipments of devices with a RAM ≥4GB grew 76% QoQ. This was driven by Samsung, which contributed 62% of the shipments in this segment.
  • Shipments of devices with 64GB internal memory grew 90% QoQ and 197% YoY, driven by Samsung models.
  • Shipments of devices with 4001-5000 mAh battery capacity grew 88% QoQ, driven by vivo, OPPO, and Samsung.

Please feel free to contact us at press(at)counterpointresearch.com for further questions regarding our in-depth latest research, insights or press inquiries.

Analyst Contacts:

Karn Chauhan

Abhishek Choudhary

 

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