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Realme
Realme was spun off of Oppo and while they are only 3 years old, the company has been growing rapidly, particularly in emerging markets, from a miniscule share in 2018 to over 4% of the global smartphone market and currently, commanding a 12% share in India and is in the top 5 in a number of Southeast Asian countries.
Realme is facing the same issues as other smartphone brands on the supply side, but do not have the bargaining power of Samsung Apple, or Xiaomi to gain leverage. Realme has been open about the rising cost of producing smartphones, particularly as their phones tend to be mid to lower-tier priced models (Their latest, the GT Neo, sells for ~$315 and they have phones priced down to $50) and recent comments by senior executives indicated that they expect prices to increase significantly in the 2nd half of the year, citing storage, charging components, and batteries as some that are seeing rapid price increases. The company expects these shortages will continue through the 2nd half and l push smartphone prices up by ~10% in 2H. Some Chinese smartphone manufacturers have lowered orders and shipment targets. April was a weak month for smartphone shipments in China, down 23.8% sequentially and down 34.1% Y/Y, after three months of positive Y/Y growth,.
A price increase would begin to erode the smartphone price declines major smartphone brands trying to appeal to more price conscious customers. While a 10% increase might not be enough to keep a replacement phone from being purchased, the actual production costs in 2H could be greater than 10%, such that the price increase would not cover the added cost.
Realme was spun off of Oppo and while they are only 3 years old, the company has been growing rapidly, particularly in emerging markets, from a miniscule share in 2018 to over 4% of the global smartphone market and currently, commanding a 12% share in India and is in the top 5 in a number of Southeast Asian countries.
Realme is facing the same issues as other smartphone brands on the supply side, but do not have the bargaining power of Samsung Apple, or Xiaomi to gain leverage. Realme has been open about the rising cost of producing smartphones, particularly as their phones tend to be mid to lower-tier priced models (Their latest, the GT Neo, sells for ~$315 and they have phones priced down to $50) and recent comments by senior executives indicated that they expect prices to increase significantly in the 2nd half of the year, citing storage, charging components, and batteries as some that are seeing rapid price increases. The company expects these shortages will continue through the 2nd half and l push smartphone prices up by ~10% in 2H. Some Chinese smartphone manufacturers have lowered orders and shipment targets. April was a weak month for smartphone shipments in China, down 23.8% sequentially and down 34.1% Y/Y, after three months of positive Y/Y growth,.
A price increase would begin to erode the smartphone price declines major smartphone brands trying to appeal to more price conscious customers. While a 10% increase might not be enough to keep a replacement phone from being purchased, the actual production costs in 2H could be greater than 10%, such that the price increase would not cover the added cost.
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Barry Young
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