Mobile manufacturing remained crippled from January to May due to lack of LCs 

According to the latest data released by the Pakistan Telecommunication Authority (PTA), the production and import of mobile phones in the country have nosedived in the first five months of 2023. A scanty 48.8 lakh mobile handsets were locally manufactured, while a trifling 4.1 lakh were imported commercially. This is a stark contrast to the 1.24 crore phones manufactured locally and 9.4 lakh imported during the same January to May period last year.

To highlight the contrast, In May 2022 alone local companies produced 26.9 lakh mobiles. So what happened?

Why the dip? 

“Decline is a misnomer in terms of elucidating the phenomena that’s taken place over the aforementioned months,” says Muzzaffar Hayat Piracha, CEO of AirLink Communication. He expounds that it is not a decline in demand or supply, but a quandary of financing. “The State Bank of Pakistan made it exceedingly arduous for us to access letters of credit (LC) to import the components we necessitate for production. This disrupted industry-wide operations, and affected output. Access to LCs has normalised this month, so you can envisage a swell in these numbers as they will more closely emulate last year’s henceforth.”

Muhammad Naqi, CEO of Premier Code, concurs with Piracha. “The LC issue was especially acute from January to April,” he remarks, “and it also affected the import of Completely Built Units (CBUs) and Semi Knocked Down (SKD) kits. This engendered an opportunity for smugglers to bring in illicit phones into the market.” He adds that the PTA has taken cognisance of this and blocked many International Mobile Equipment Identity (IMEI) numbers to curb this practice.

Local phone sales breakdown

Out of the 48.8 lakh locally manufactured phones, 40 lakh are feature phones while the remaining 8.8 lakh are smartphones. This discrepancy is in stark contrast to the more equitable 53% and 47% split for feature phones and smartphones in the comparable period last year, which translates to a ratio of 1.13:1. The current split is 82% and 18% for feature phones and smartphones respectively, which means a ratio of 4.55:1.

“Customers still have an appetite to consume mobile phones, despite being pressed by inflation,” Piracha said. He explained that customers have shifted to more affordable options in the face of rising prices. “For example, if customers previously wanted a phone worth Rs 1.5 lakh then now they are settling for phones worth Rs 1 lakh.”

Similarly, he added, customers have compromised on some features to save money. “If they wanted a phone with four cameras then now one with three cameras will suffice.” Piracha concluded that customers do not want to stop buying phones, but they also have to deal with the reality of inflation over the past year.

In terms of brand performance over the aforementioned period. The top ten brands manufactured during the January to May period for 2023 are as follows: