India Expects Samsung Smartphones to Benefit from Spread of 'China Boycott Movement'

[Asia Economy Reporter Minji Lee] As the boycott movement against Chinese goods spreads in India, there is speculation that Samsung Electronics could gain a windfall benefit. This is based on the judgment that the company, which achieved surprising results due to the strong performance of its smartphone division in the second quarter, can maintain its upward trend in the second half of the year.

According to Counterpoint and IDC, smartphone market analysts, on the 8th, Chinese smartphone companies are showing a slowdown in sales in the Indian market. The conflict between India and China is interpreted as benefiting Samsung Electronics. In India, anti-China sentiment is growing following the bloody clashes in the Ladakh region of the Himalayas last month. The Indian government’s retaliation against Chinese companies is also continuing. The government has banned the use of Chinese applications and taken measures to prevent Chinese goods imported into India from being shipped.

India is the world's second-largest smartphone market after China. Looking at the market share of smartphones in India in the first quarter, Xiaomi holds the top spot with a 30% share. It is followed by Vivo (17%), Samsung Electronics (16%), Realme (14%), and Oppo (11%). The combined market share of the four Greater China region companies, excluding Samsung Electronics, exceeds 70% of the total.

In the securities industry, if the boycott in India continues, Samsung Electronics is expected to regain its position, which had been pressured by the low-price competition of Chinese smartphone companies. This is because production disruptions are inevitable for Greater China region companies that procure key smartphone components from China, and if the boycott of Chinese products continues, Samsung Electronics can enjoy a windfall benefit. Samsung Electronics is already actively targeting the Indian market. It has implemented major smartphone price discounts, such as Galaxy Forever, which allows customers to purchase the Galaxy S20 series at discounted prices, and the Galaxy Assured pricing plan, which compensates up to 70% of the device price.

Earlier, Samsung Electronics announced that its operating profit for the second quarter increased by 26% compared to the previous quarter, reaching 8.1 trillion won. The IT Mobile division (1.9 trillion won) was expected to suffer from severe smartphone sales slumps due to COVID-19, but smartphone shipments are estimated to have increased based on a rapid recovery in June. As demand for smartphones begins to rebound, the windfall benefit from the India-China conflict is expected to have a positive additional impact on performance improvement. Park Seongsun, a researcher at Cape Investment & Securities, said, "External variables such as the US sanctions on Huawei and the conflict between China and India are expected to have a positive effect on the performance increase in the second half of the year for the IT Mobile division."

Suppliers that provide parts to Samsung Electronics are also expected to benefit. This is because the windfall benefit is expected to increase the shipment volume of parts suppliers to Samsung Electronics. No Kyungtak, a researcher at Eugene Investment & Securities, explained, "Samsung Electronics is expected to achieve high sales in India and emerging markets as a result of this situation," adding, "The performance improvement of MCNEX and Patron, which supply camera modules to the company, is anticipated."