Indonesia's smartphone market to grow by 8% to 44 million in 2022

Indonesia's smartphone market to grow by 8% to 44 million in 2022

Despite supply-side hindrances, Indonesia's smartphone market is expected to reach 44 million units in 2022, growing by 8% year-over-year (YoY), said a study.

According to the IDC Worldwide Quarterly Mobile Phone Tracker, this comes after a strong rebound in 2021 with 40.9 million smartphones resulting in an 11% growth.

The first half of 2021 recorded strong growth of 47% compared to 1H20 and 20% against 1H19, although the market slowed in 2H21, the study pointed out.

"2021 started with a bang as YoY growth reached double digits for the first half of the year. This was mainly due to the decreasing of COVID-19 cases and the preparation for Ramadhan. But it quickly came to a halt as the COVID-19 Delta wave came, forcing the government to apply restrictions that led to a retail shutdown in 3Q21," noted IDC.

In the midst of that, supply continued to tighten. Shipments improved by 10% QoQ in 4Q21 as the cases were contained, restrictions were lifted, and vendors released new products in tandem with the year-end double date promotions throughout the quarter. However, shipments were still lower than last year by 13%.

IDC expects smartphone supplies to improve gradually this year. Smartphone vendors are expected to start stocking up before the Ramadan festive period and to prepare for changes in the Tingkat Komponen Dalam Negeri (TKDN) local content regulation, as well as tax increases in April 2022.

"Vendors are largely ready for the increase in the local content requirement, but there are uncertainties regarding their higher-end portfolios which may be subject to a stricter set of rules. Channel players also may stock up before the tax rate is increased from the current 10% to 11%" says Vanessa Aurelia, Associate Market Analyst from IDC Indonesia.

"The recent merger between Indosat Ooredoo and Hutchison 3 is expected to further accelerate the growth of 4G and 5G network in Indonesia", Vanessa added.

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