According to persons familiar with the situation, Samsung plans to eventually quit the high-volume, low-value feature phone industry in India, with the final batch of devices for the nation likely to be made by contract manufacturing partner Dixon this December.
Samsung is said to be focusing its efforts on higher-priced segments, with one source claiming that Samsung will introduce handsets mostly above Rs 15,000 in the future.
The move comes as the Korean firm, one of the two major multinational contributors to the government’s production-linked incentive (PLI) scheme, is required to receive sops only on handsets costing more than Rs 15,000 factory price, and an average selling price in India rise, market experts say the Rs 10,000-20,000 price segment is seeing the most traction by volume.
“Samsung has spoken to channel partners and stated that they will depart the India feature phone sector in the coming months or before the end of the year,” one of the sources told ET.
ET’s inquiry to Samsung went unanswered, and Dixon declined to comment.
According to industry tracker Counterpoint Research, feature phone shipping in India fell 39 percent year over year in the first quarter of 2022, owing to a supply shortage, excessive inventory levels, and declining demand due to rising retail inflation.
According to Counterpoint Research data, Samsung, which was the market leader until a few years ago, has slipped to third place with a 12 percent share at the end of March, behind leader Itel (21 percent) and home-bred Lava (20 percent).
According to Counterpoint, the basic phone segment contributed 1% in value and 20% in volume to Samsung’s overall quarterly shipments at the end of March. Samsung’s likely exit will open the market for Lava, HMD Global’s Nokia, and Transsion Holding’s Itel sub-brand in the feature phone segment.
The Korean company has been attempting to reclaim its dominance in the higher-end smartphone market. Samsung officials told ET that the company anticipates double-digit growth in the June quarter. According to Counterpoint, it had already taken the lead in March, with a 22 percent market led by 5G handsets priced above Rs 15,000, displacing Chinese rival Xiaomi in the process. According to the research agency, the company has also been the top-selling 5G smartphone brand in India for two quarters in a row.
Analysts believe the government’s PLI initiative for local handset manufacturers played a role in Samsung’s ambitions. Multinational brands are required to make phones that cost more than Rs15,000 (factory price) to qualify for the scheme’s benefits, although domestic brands can profit by producing lower-cost phones.
As a result, analysts claim that Samsung has handed over its inexpensive phone manufacturing business to local firm Dixon. With feature phone demand at an all-time low, analysts say it makes sense for Samsung to stop selling them in India and concentrate on exports.
According to government data, India remains a major export hub for feature phones in the world, catering to robust demand in Latin America and Africa, with exports worth Rs 1,496 crore in FY21, up 621 percent from 2020. According to ET’s sources, Samsung may continue to focus on exporting feature phones from India.
Featured Image: samsung.com
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