Mobiles & Tablets

Chip shortage hits realme’s offline plans

Abhishek Law Kolkata | Updated on July 13, 2021

The brand has already seen a 60 per cent jump in sales in January-June 2021 period over the same period last year

Faced with chip shortages, smartphone–maker ‘realme’ – which is among the top five ODMs in the country – has put a hold on its offline expansion plans. The company is, however, hopeful of a 30-35 per cent growth in sales over calendar year 2020, driven by better specs in new launches, a higher online push and pent-up demand.

The brand has already seen a 60 per cent jump in sales in January-June 2021 period over the same period last year. It clocked 19 million device sales in 2020, a 30 per cent y-o-y growth over 2019.

Store sales account for 40 per cent of devices sold, of which 50 per cent is from tier 1 towns and 20 per cent is from tier-2. The remaining 60 per cent contribution comes from online sales.

According to Madhav Sheth, VP-realme and CEO – realme India and Europe, with “constraints on supply side – that include chip shortages from global players”, the company is servicing 65 per cent of its smartphone demand.

Moreover, supply constraints have already led to a 2-6 per cent price hike (₹200- 500 in absolute terms) across four recent models (between ₹6,500 and ₹11,000 price points).

Chip shortages, now a global phenomenon, is also plaguing laptop, PC-makers and automobiles alike.

“As of now, we are not expanding on the store front primarily because of supply constraints. The focus continues to be on online and selling through the existing stores where we are present. We are in 20,000 stores (point of sales) at the moment. Store additions will be supply-led,” he told BusinessLine.

Growth plans

Growth for ‘realme’ in 2021 will be led by “democratisation of technology” and higher adoption on new devices.

Despite replacement cycles being extended to 18-20 months, instead of the previous 12-15 months, a strong “pent-up demand” is being witnessed. People are looking at more “value-for-money offerings”, thereby leading to a surge in demand across “sub-₹20,000” and “sub-₹10,000” prices – two areas where ‘realme’ has a strong play.

Moreover, it will ramp-up play in the “device ecosystem” including the launch of laptops, tablet PCs and other AIOT offerings. It recently forayed into accessories like earplugs, neckbands and wearables, smartwatches and fitness bands, apart from television sets.

“We are confident of a 30-35 per cent growth in 2021. Introduction of 5G technology will also improve adoption of other devices. Right now we are aiming to make any ‘realme’ phone priced above ₹15,000 to be 5G-enabled,” Sheth added.

Published on July 12, 2021

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