The global recall and subsequent decision to stop production of Galaxy Note 7 smartphones by Samsung could result in a sharp fall in the Korean electronics company's handset shipments to India this calendar year, according to market research, consulting and advisory services firm CMR.
Samsung's smartphone exports to India could fall short by four million handsets this year, leading to a loss of about Rs 6,500 crore, the research firm said.
"As per CMR's impact analysis, Samsung's Smartphone shipments target may fall short of 4 million units than its estimated shipments for the calendar year 2016, due to Galaxy Note7 battery issue that led to its recall and later halt of production worldwide. This translates to Rs 6,457 crore in terms of revenues for the company," CMR said.
Though Note7 is a high-end premium Smartphone, the impact would be on Samsung spanning all across the segments. "The issue is faced with the flagship model of the year that too around festive season, as a result, customers' confidence is shaken," Faisal Kawoosa, Principal Analyst for Telecoms at CMR said.
"A perception, right or wrong, gets built within the market that if the issue is with the high-end premium model, there could be issues in the other models too," Faisal added.
The fall in shipments would also result in the Samsung India's revenues growing at a lower clip this year, from 46 per cent estimated earlier, to 25 per cent.
"Samsung was expected to touch revenues of Rs 45,446 crore in CY 2016, an increase of 46 per cent compared to previous calendar year. However, following the Note 7 issue, it can earn revenues of Rs 38,989 crore, which means a growth of 25 percent," CMR said.
Earlier, ratings agency Fitch Ratings had said that the Galaxy Note 7 debacle could cost Samsung Electronics Corporation (SEC) in terms of its overall credit profile though the financial impact won't be lower.
"The problems with the Note 7 have raised long-term uncertainty about SEC's handset operations, as the issues with the flagship model have highlighted weaknesses both in R&D capabilities and the company's capacity to efficiently remedy serious hardware defects," Fitch Ratings said in a note recently.
