Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Thursday, October 08, 2020

Mobile factories on the eve of a new year with record fall

The president of the Asociación de Fábricas de Terminales de Electrónica (Afarte) (Association of Electronics Terminal Factories), Federico Hellemeyer, did not dare to project a number for 2020 but acknowledged that companies expect to end the year at a “much lower” level than in the previous one. The plants established in Tierra del Fuego were stopped for 84 days in total: 60 between March and May and ther 24 days in August.  

The mobile phone industry based in Tierra del Fuego is preparing for a year that will be historic because of being bad. In 2019 they manufactured 7 million pieces of equipment, the lowest production since the industrial promotion regime exists in that province. This year began with renewed expectations after the change of government but in March the Covid-19 pandemic erupted with an uncertain end.

The president of the Asociación de Fábricas de Terminales de Electrónica (Afarte) (Association of Electronics Terminal Factories), Federico Hellemeyer, did not dare to project a number for 2020 but acknowledged that companies expect to end the year at a “much lower” level than in the previous one. In short, this year the negative record would be broken again and by a wide margin. As he assured Convergencia, after the last outbreak of coronavirus that stopped the factories in Rio Grande on July 31 for 24 days, all forecasts were kept. The production started working again in the last week of August with strict protocols: "Today the situation is very limited and there is no way to project numbers", the businessman said resigned.

To be forgotten. For the electronics companies that assemble mobile phones in the southernmost province, the picture of the crisis was initially complex. As China had begun its quarantine for two months, in Argentina the lack of supplies was felt prior to the quarantine. On March 18, like the rest of the industry, they closed until mid-May and from that date they returned to production but with protocols that modified the manufacturing processes.

The president of Afarte remarked that the factories were idle for 84 days in total: 60 between March and May and another 24 days in August. “Today the situation is very limited because we produce less than before the pandemic and there is no way of knowing how much production will be at the end of the year. The only certainty is that it will be much lower than that of 2019 ”, he said.

According market: The same factors make sales more complex. By mid year, before the August new outbreak, Alcatel's Commercial Director, Martín Cricco, pointed out that demand fell, but supply also did, due to international trade problems, so “it is not clear if people buy more or less”. By then, the company predicted that its horizon of 700,000 units sold prior to the pandemic was unattainable and was content to exceed the 500,000 barrier by the end of the year.

After the contagion crisis in Río Grande, Motorola recognized that the sector has a "very low" stock and that it will be sold to the extent that it can be produced.

Changes in cell phone sales by ranges. Regarding the composition of the Argentine market, high-end cellular telephony equipment, which by the end of 2019 absorbed 5% of the total in the first half of the year, managed to reach 10% of the market. Simultaneously, low-end equipment fell from 42% of the pie in 2019 to 19% between January and June 2020, noted Afarte.

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