‘Supply chain shortages, increased shipping charges responsible for hike in smartphone prices,’ says Xiaomi

By: |
September 07, 2021 3:06 PM

The global semiconductor shortage is finally starting to take its toll on India's top smartphone and smart TV brand.

Xiaomi, Redmi, Redmi Note 10 price hikeAll this will expectedly impact Xiaomi’s current and upcoming launches. (Photo credit: Saurabh Singh/Financial Express)

Xiaomi on Tuesday said shortages across the supply chain and an ‘unprecedented’ increase in shipping charges have forced the company to hike the retail prices of some of its smartphones including the popular Redmi Note 10 in the last few weeks.

The Redmi Note 10 is possibly the first Xiaomi smartphone to have received as many as five price hikes in recent history. The phone was launched in India earlier this year, at a starting price of Rs 11,999. The said entry-level model currently sells for Rs 13,999. What’s noteworthy is the fact that the phone in question received two price hikes in quick succession within a month itself.

Evidently, the global semiconductor shortage is finally starting to take its toll on India’s top smartphone and smart TV brand.

“Over the last couple of months, we have witnessed shortages across the supply chain. Due to massive demand-supply mismatch, the majority of components used in smartphones, and other electronic gadgets (chipsets, display panels, display driver, back panels, battery, etc.) have seen constant upward movement in their prices,” Sneha Tainwala, who is business lead for Redmi India said in a statement shared with Financial Express Online over email.

Factors like pent-up demand, COVID-19-induced slowdowns, and sanctions against some key Chinese technology companies have all contributed to a global shortage of chipsets — the key component in electronic manufacturing. Qualcomm for instance, has been struggling to meet orders. The Redmi Note 10 India variant is based on the Qualcomm Snapdragon 678 system-on-chip.

Also Read | Honestly speaking: Manu Jain on Xiaomi’s unique business model, cracking offline market and beating Samsung

The cost of battery packs, camera modules and display panels have also shot up by as much as 10 percent depending on the vendor.

“This, coupled with an unprecedented increase in shipping charges, has affected almost all the smartphone players, including us,” Tainwala said.

The Redmi Note 10 price hike is not an isolated case. Xiaomi also discontinued the base configurations of Redmi Note 10 Pro and Redmi Note 10 Pro Max in the country last month making both these phones a little more expensive to buy.

Currently, the Redmi Note 10 Pro is available in two options, 6GB/128GB and 8GB/128GB. While the 6GB RAM variant can be purchased for Rs 17,999, the 8GB RAM variant costs Rs 18,999. The Redmi Note 10 Pro Max is available in the same configurations. While the 6GB RAM variant of Redmi Note 10 Pro Max is priced at Rs 19,999, the 8GB RAM variant is priced at Rs 21,999.

To be completely fair, Xiaomi president Wang Xiang had warned back in March itself that the company wasn’t immune to the ongoing supply chain shortages and that even though it was “looking okay” it was “feeling pressure.” Xiaomi may eventually have to “pass part of the cost increase to the consumer in different cases,” Xiang had told investors during an earnings call.

All this will expectedly impact Xiaomi’s current and upcoming launches but the company is likely to accommodate the added cost within the launch price and hopefully, wouldn’t bump up the prices any further later — though this is of course subject to market dynamics. The Redmi 10 Prime was launched last week at a starting price of Rs 12,499 for a version with 4GB RAM and 64GB storage going up to Rs 14,499 for a model with 6GB RAM and 128GB storage.

“Despite the new changes, we at Mi India will continue on our promise of maintaining a profit margin under 5 percent on hardware and optimise our costs to offer the best price we can to the consumers,” Tainwala added.

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