• Friday, June 21, 2024
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Smartphone supply chain snags beckon to resource-rich Nigeria

Smartphone part (1)

A projected 2.8 percent recovery of the smartphone market will take longer in 2023 than previously expected, according to the International Data Corporation (IDC). It could create opportunities for resource-rich countries like Nigeria to tap into.

For the average Nigerian, a delayed recovery means the prices of new smartphones will remain high. The average selling price of smartphones increased by 10 percent in the third quarter of 2022, according to research by Counterpoint’s Market Monitor Service.

In 2021, Alliance for Affordable Internet released a report, which found that the average cost of a smartphone is over 40 percent of the average monthly income in Nigeria and other sub-Saharan African countries.

“In some regions, people would have to spend far more than the global average. For example, in South Asia and sub-Saharan Africa, the number surpasses 40 percent. Even worse, in the least developed countries, the average person would have to spend over half of their monthly income to buy a smartphone,” the report said.

The expected price increase due to the supply chain snags would make it even more difficult for many Nigerians to afford the devices. Data from Statista show that smartphone penetration stood at 37.7 percent by the end of 2022, one of the lowest in the world and below many African peers.

In the Worldwide Quarterly Mobile Phone Tracker released in December, the forecast is that shipments of smartphones will decline 9.1 percent in 2022, a reduction of 2.6 percentage points from a previous forecast. IDC, therefore, expects smartphone shipment volumes to total 1.24 billion units in 2022. While the corporation still expects a recovery of 2.8 percent in 2023, however, it has reduced the year’s forecasts by roughly 70 million units, given the ongoing macroeconomic environment and its overall impact on demand.

China, which leads the smartphone supply chain, is grappling with containing COVID-19, which has affected its manufacturing activities. The country recently downgraded the management of coronavirus to Class B from Class A and cancelled quarantine requirements following an array of recent policy shifts regarding the virus, as the nation hit a full vaccination rate of over 90 percent and the COVID-19 virus exhibited less severity.

Despite the new measure, IDC says China’s smartphone is set for a rough 2023 and is not expected to see meaningful growth until 2024 amid global supply chain disruption and weak consumer spending at home.

What is a smartphone supply chain?

The smartphone supply chain describes a process designed using a proprietary blueprint that relies on the working parts shipped from suppliers and manufacturers from around the world. In order for a smartphone to sell and work well, its supply chain must be unique to the company’s design and needs.

An efficient supply chain, therefore, requires end-to-end processes that ensure resource availability, production efficiency, and product delivery. Apple, for instance, is renowned to have one of the world’s greatest supply chain processes.

Nigeria, however, commands in abundance some of the raw materials companies in the supply chain required to manufacture the various components of a smartphone. This is apart from its rich human resource, which now proliferates through mass migration in many sectors in different economies in the world.

In terms of resources, the composition of phones varies depending on the brand, but an average materials list for a smartphone includes 25 percent silicon; 23 percent plastic; 20 percent iron; 14 percent aluminum; 7 percent copper; 6 percent lead; 2 percent zinc; one percent tin; one nickel; and 0.03 percent barium. These elements are used in various degrees to produce components such as the system processor, which is mainly based on the system on a chip – by far the most complex component in the entire smartphone since it encompasses the brain of the device. A microchip is mostly derived from silicon. Also, Gorilla Glass comes from a chemically-treated glass made by Corning. The glass is strengthened by bathing it in a potassium salt-ion-exchange bath.

The battery comes from minerals such as lithium, nickel, and cobalt. Microphones, speakers, and vibration and produced from minerals like nickel, praseodymium, neodymium, gadolinium, terbium, and dysprosium.

According to the World Economic Forum, some of the vital metals to build these devices are considered at risk due to geological scarcity, geological issues, and other factors.

However, Ifak Akubue, chairman of Phone Allied Product Dealers, told BusinessDay that making a local smartphone from scratch would be an easier fit for Nigeria to achieve at the moment compared to meeting demands in any of the global supply chains. The country’s involvement in the smartphone manufacturing industry is a major boost for the economy. One of the benefits is creating new jobs that would help to reduce endemic poverty.

“It would encourage youths to put their creativity to profitable use. It would also reduce the brain drain Nigeria is facing due to individuals leaving the country to use their intellect in other countries that appreciate them more. It would put Nigeria on the map as one to reckon with in terms of technological advancement,” Akubue said.

In Africa, Rwanda is the only country that said its local phone Phone Mara was produced entirely in the country. Other countries like South Africa, Algeria, and Egypt, which have manufacturing plants, are only able to assemble phones locally.

Nonetheless, Akubue said for Nigeria to achieve such a technological breakthrough, it would need adequate funding and resources which the country so far has not been able to provide.

“Except if there is a drastic change in the way things are handled resource-wise, the production of local phones may be a project that might never see the light of day,” he said.