Smartphone production surges 27.58% in Jan-Sep

Eased foreign currency regime and manufacturers' race to build inventory boosted smartphone production in Bangladesh by 27.58% year-on-year in the first nine months of 2024.

According to the Bangladesh Telecommunication Regulatory Commission (BTRC), smartphone production surged to over 65 lakh units between January and September, compared to 51 lakh units during the same period in 2023.

In September, 9.12 lakh smartphones were locally manufactured or assembled, making it the second highest production month of the year, following February's production of 9.25 lakh units.

Monthly production had fallen to 5.62 lakh in June before gradually picking up. More than a dozen brands produce or assemble products locally.

"The year 2023 was challenging for manufacturers amid the foreign currency crisis," said Ziauddin Chowdhury, country manager of Xiaomi Bangladesh, which serves 18% to 20% of the annual demand.

He noted that market demand, driven by both new smartphone users and those replacing their handsets every 3-4 years, remains subdued due to high inflation. Companies are ensuring their inventory for the coming months.

During the pandemic, around 1.2 crore smartphones were sold in the country's formal market, with local factories catering to about 90% of the demand. But due to price hikes in 2022 and 2023, alongside a decrease in disposable income, demand fell to less than 1 crore units, while local factories now serve around 95% of the formal market.

"Importing raw materials and parts became easier this year, and demand in the affordable segment has grown by approximately 10% year-on-year," said Rezwanul Hoque, CEO of Ismartu Technology BD, which leads the market with around a 38% share through its three brands: Techno, Infinix, and Itel.

Both Hoque and Chowdhury expressed concerns about grey market imports that undermine the business of compliant manufacturers.

"We don't have any official data, but we estimate that around 30-40 lakh refurbished, unofficial, or used smartphones are sold in the Bangladeshi market annually, which is nearly 40% of the total demand," said Hoque.

Production of feature phones also increased to 1.44 crore units from January to September, up from 1.13 crore for the same period last year. Formal imports of smartphones more than tripled to over 66,000 units, including more than 25,000 5G phones.

An imported phone is subject to a total of 57% in taxes and duties, while locally manufactured phones face taxes of only 20% to 25%, according to industry players.

The Bangladeshi market has significant growth potential, as only around 40% of the around 13 crore mobile phone users own a smartphone, said Hoque.

Chowdhury noted that two-thirds of the smartphones sold in the formal market are priced below Tk20,000, while phones priced above Tk30,000 account for no more than 2% of annual sales by local factories.