In India, the festive season of smartphone and television sales did not meet expectations, adding to the woes of electronics companies. The stock of unsold goods has accumulated with the shopkeepers. In such a situation, companies are preparing to reduce their production in the next two to three months. According to an ET report, companies may reduce production by up to 20% compared to the planned plan. This is mainly due to weak demand and rising prices of memory chips. According to the report, sales of smartphones and televisions during the festive season this year have been around 25% lower than the same period last year. At the same time, from January to September, sales in both of these categories fell by more than 10% year-on-year.

How much has smartphone and TV sales declined?

According to the report, sales of smartphones and televisions during the festive season this year have been around 25% lower than the same period last year. At the same time, from January to September, sales in both of these categories fell by more than 10% year-on-year. The festive season is very important for electronics companies. The period from Onam to Diwali contributes about 30% of the annual sales of smartphones and televisions. In such a situation, weak demand during this period may affect the earnings, production and retail trade of the companies.

What is the reason behind smartphones and TVs becoming expensive?

The main reason for this decline is the rising prices of memory chips. According to the report, memory prices have increased two to three times in the last 10 months. The supply of memory chips has come under pressure due to the growing demand for artificial intelligence (AI) related data centers and servers. It has a direct impact on the price of electronic devices. According to the report, smartphone prices have increased by an average of 35-40% and television prices by 20-25%. This has affected the purchasing power of consumers especially in the budget and mid-range segments.

Pressure on TV manufacturing companies too

Television companies are also facing the twin challenges of weak demand and expensive components. Higher India CEO Satish Nsa said in an ET report that television sales have declined by around 15% compared to last year’s festive season. Apart from this, the cost of the printed circuit board (PCB) containing the memory chip used in 32- to 43-inch TVs has increased to $80 this year. Suppliers expect it to reach $110 by January-February. Sony India managing director Sunil Nair said in a media report that the company has seen growth in sales of TVs larger than 65 inches, but there is pressure in the 55-inch and smaller TV category.

Why are companies reducing production?

When market demand drops and shoppers already have a lot of inventory, it can prove costly for companies to continue production. Due to which there is a danger of stock increase in warehouses and capital of companies gets stuck. For this reason, companies want to reduce the excess stock present in the market by reducing production in the next two-three months. By reducing production, companies will try to control their costs and create a balance between demand and supply. Jaina Group Managing Director Pradeep Jain said in an ET report that smartphone production could drop by around 20%. However, he hopes that consumers will start replacing older devices next year, which may see some improvement in the market.