Feature Phone Prices To Surge By 3-5 Per Cent

by CXOtoday News Desk    Jul 05, 2016

Feature Phones Price To Increase By 35 Per Cent

Cell phones have always been a sought after product in the market, as  newly-released smart phones and upgraded cell phone features create excitement among users. Prices of feature phones are expected to rise up to 5 per cent as the supply of key components from China is on a downward spiral due to the closure of some factories, which is affecting material costs, industry players said as reported by the Business Line.

“Display and battery are two main components of feature phones. As a result of consolidation in China, there is pressure on supply and price of these components,” ICA National President Pankaj Mohindroo said.

Read Also: Smartphones overtake feature phones finally, confirms Gartner 

Indian Cellular Association (ICA) expects prices to increase by 3-5 per cent as key components such as display and batteries are turning dearer.

The industry data also reveals a surge in the shipment of smartphones in the country as around 60 per cent mobile subscribers use feature phones. According to TRAI data, the number of mobile subscribers was 82.6 crore, as on April 2016.

The feature phone range starts from around INR 500 and goes up to INR 4,000. MTech Mobiles Managing Director Vivek Agarwal said prices of LCD screens have nearly doubled due to closure of some glass factories in China.

“Material unavailability is impacting the market. Due to huge competition mobile players are paying more for the materials,” he said.

Read Also: This Year, Smartphones To Overtake Feature Phones In India

Agarwal also said the economies of scale in China seem to have been affected due to an increase in mobile manufacturing in India. Closure of plants is putting pressure on sourcing components from China, which is going to impact the prices.

“The companies would need to increase their prices by 5 per cent at least to sustain their profits,” Agarwal said.

MTech has a mobile manufacturing unit at Baddi in Himachal Pradesh and it produces 3 lakh handsets every month.

“Feature phone market, though quite big, is going through hyper competition. Margins are down to zero or negative if supply is not tied up. Display and batteries are particularly firming up. We should see prices firming up by 3-5 per cent at least for survival,” Mohindroo said.

According to ICA, the price of LCDs has increased by 5-8 per cent, of batteries by 2-3 per cent and of memory cards by 2-3 per cent. Feature phone maker itel Mobile said there was a major shortage in LCDs, which would lead to a price increase.

“Major shortage is in LCD glass. The cost impact is close to INR 60-80. itel will increase the price between INR 30-50 in selected feature phone models,” itel Mobile CEO Sudhir Kumar said.