Electronics, handset cos slash production

Several electronics manufacturers including Lava International, Transsion Holdings, MCM Telecom Equipment, Videotex International and Veira Electronics are cutting production by up to 50%, as the raging second Covid-19 wave hits demand and due to a shortage of components and factory workers.
Some component and device makers such as TMB Battery, Khy Electronics, Salcomp, Jabil, Sunwoda Electronics, JSP electronics, Hong Guang De Technology, Rashmi Rare Earth, Sahasra Electronics and VVDN have shut factories for 7-10 days or reduced shifts to curb the virus spread, several industry executives told ET. They have also prioritised arrangements for staff’s health.

Lava, a homegrown handset maker and contract manufacturer for Nokia phones, has decided to shut its factory for the next few days due to uncertainty around consumer demand. Dixon Technologies has halted operations at its LED lights manufacturing plant, people familiar with the workings of both the companies said.

“Our labour workforce, managers and team members are consistently facing Covid-19 emergencies, leading to the complete collapse of our work ecosystem,” said Arjun Bajaj, director of Videotex International, which manufactures televisions for Realme and Toshiba.

Videotex has prioritised the safety of its workers and cut production by over 50%, Bajaj said.

“…we will monitor this situation, and if it does not improve, we may also have to halt our production temporarily for a few days,” he added.

Covid-19 restrictions in several parts of the country and fear of economic hardships have already hurt consumer demand, with market trackers like Counterpoint Research cutting its smartphone shipments forecast for the April-June quarter by 5 million units to 32-34 million.

To be sure, Uttar Pradesh and Tamil Nadu have permitted their large electronics clusters to continue production, but delayed logistics, rising cost of components and the additional burden of repeated Covid-19 tests have forced some companies to either reduce operations or halt them altogether.

New Launches Unlikely
“Brands are cautious of an inventory pile-up, so there will be reduced activity around new launches, marketing and production as well,” a top executive at a leading Chinese smartphone maker told ET.

The executive said states like Maharashtra are slowly emerging out of peak crisis mode and that has kept optimism alive about a sudden pullback in demand.

Vivo, Lava, Transsion and Dixon did not respond to ET’s queries till press time.

MCM Telecom, Veira Electronics, TMB Battery, Khy Electronics, Salcomp, Sunwoda, Jabil, JSP electronics, Hong Guang De Technology and VVDN could not be immediately reached for comment.

“So far, we are at about 85% of our regular production levels due to some absenteeism,” said Amrit Manwani, MD of Sahasra, which makes printed circuit boards. “Being in exports, we have to meet delivery commitments, so we are not planning to shut down.”