Consumer Electronics - Booming Opportunities Based on Trends in the Industry

1. KEY INSIGHTS ON SENTIMENT ANALYSIS: BOOMING OPPORTUNITIES BASED ON TRENDS IN THE INDUSTRY www.42signals.com

2. The Indian consumer electronics market has continuously expanded and seen some significant changes in the past decade. Though the market experienced a setback after the onset of the pandemic – battling manufacturing issues, supply chain disruptions, import and export constraints, shipping delays, raw material shortages, and altered consumer behavior, its recovery was anticipated and visibly noticed over the past year. In 2022, the consumer electronics market was valued at US$70.6 billion, expected to grow by another US$5 billion in 2023, reaching US$75.7 billion. The below graph (Figure 1) outlined by Statista shows the projected growth until 2027 along with historical data on the market’s performance since 2014. Despite the unprecedented challenges faced during the Covid-19 pandemic, the market has demonstrated remarkable resilience and continues to perform well. In fact, market growth has been steady throughout the years, and the forecasted compound annual growth rate (CAGR) for the period of 2023 to 2027 is projected to be an impressive 5.61 percent. Figure 1: Consumer electronics market growth (revenue) in India Source: Statista.com

3. In the graph (Figure 2) the Telephony and Computing segments are the highest performing categories seeing substantial year-on-year growth. The Telephony segment comprises smartphones, feature phones, and landline phones with several major players in the market including Samsung, Apple, Huawei, and Xiaomi. The Computing segment on the other hand encompasses hardware components for electronic devices (laptops, smartphones, tablets) and equipment paired with these devices (printers, keyboards, speakers). Figure 2: Consumer electronics market growth (revenue) in India as per the segment Source: Statista.com This robust growth trajectory in these segments is a testament to the market's strength and potential for continued success in the future, making it a prime opportunity for investors and businesses to capitalize on. Soaring Popularity of Cutting-edge Technology The Consumer Electronics industry has long been dominated by traditional products such as laptops, desktops, smartphones, which have been available in the market for several years. However, in recent years, new categories of products have emerged such as wearables, gaming consoles, smart home devices, and AR/VR sets seeing tremendous demand. household appliances, and

4. To get a deeper understanding of the consumer electronics market it’s important to analyze the contributing factors that have created a voracious consumer appetite. More disposable income – paychecks of the average working person, especially in a corporate environment have gone up and so have their lifestyles. This makes it easier to afford devices – not just necessities but also luxuries. Popularity of smart homes – The evolution of technology has reached a stage wherein devices can be manufactured to improve people’s day- to-day lives at an affordable price. The integration of advanced technology has resulted in the development of a wide range of smart home devices, including voice-controlled assistants such as Google Home and Alexa, surveillance devices for security, and the ability to control and monitor home appliances through a centralized system. Living on credit – The use of credit cards and EMI (equated monthly installment) options for payments is becoming increasingly popular in India. This has made it easier for people to access credit and purchase items that may have previously been out of their reach, leading to a shift in consumer behavior and spending habits. Growing middle class—As the middle-class population of India grows, a larger set of people now have the financial means to purchase electronic products to improve their lifestyles. Figure 3: Global device ownership Source: We are social and Hootsuite

5. Data from Figure 3 highlights the distribution of device ownership across the globe. Cellphones and smartphones continue to dominate the market, but other technology such as smart wearables, game consoles, and smart home devices are also gaining significant traction and competing effectively. This reflects a growing demand for a diverse range of technology and a willingness among consumers to adopt and integrate these newer technologies into their daily lives. Growing Demand and Opportunities The modern consumer is more informed and discerning than ever before, thanks to the widespread availability of information on the internet. Today's shoppers can research and compare products, allowing them to make informed purchasing decisions. This is particularly true in the consumer electronics market, where the internet has made it easy to learn about the latest products, technologies, and pricing options, allowing consumers to choose the best options that suit their budget. The consumer electronics market in India is witnessing a significant shift, with a growing demand for international brands. This trend can be attributed to several tech giants expanding their operations in the country. Apple, for instance, has recently made headlines with its successful efforts to open manufacturing plants in India and plans to launch its own outlets in the near future. Several other tech companies – seeing the potential for explosive growth – are tapping into the Indian consumer electronics market for manufacturing electronic components. Reports from IBEF detail that the electronics hardware production in India stood at US$63.39 billion in 2021 with the major market contenders being the refrigerator, washing machines, and air conditioners estimated at US$ 3.82 billion, US$ 8.43 billion, and US$ 3.84 billion, respectively.

6. Ramping up production in the Indian market makes the product accessible and affordable to Indian consumers, and easy to export to other countries by leveraging India’s manufacturing infrastructure and relatively low labor costs. This makes it a win-win situation for both companies and consumers, as it increases the availability of products and reduces the cost of goods. Data from Figure 4 shows a steady exponential rise in consumer electronics exported from India. The year- on-year growth falls to 32.6 percent between 2021 – 2022 and 34 percent between 2020 – 2021. Figure 4: Export value of consumer electronics from India between 2015 - 2022 Source: Statista.com The above data is a clear indication that there are several areas of opportunities for companies in the consumer electronics market. For instance, the revenue projections for smartphones in 2023 (Figure 5) is expected to surpass US $41 billion with a CAGR of 7.32 percent. Due to the country’s growing middle class and rising disposable incomes, smartphones have become affordable for most citizens of the country, even in rural areas.

7. Figure 5: Revenue and CAGR projections in India by product for 2023 Source: Statista.com It comes as no surprise that the Telephony segment continues to lead in the consumer electronics industry (Figure 6). The segment's popularity is driven by the widespread adoption of smartphones, which are among the most frequently purchased electronic devices. With prominent brands such as Samsung, Apple, Huawei, OnePlus, and Google releasing new models every few months, the Telephony segment continues to see strong growth. This trend is likely to continue as smartphones become increasingly integrated into our daily lives and consumers look for the latest features and technologies. Figure 6: Revenue and CAGR projections in India by Industry for 2023 Source: Statista.com

8. Conclusion The consumer electronics market is a rapidly growing dynamic industry, with a wide range of products and technologies catering to a diverse set of consumers. The Indian market is particularly noteworthy, with a growing demand for international brands and a rapidly expanding middle class. As technology advances, customers are looking for a more seamless and integrated experience across all devices, as well as more intuitive and personalized interactions with the devices they use. Companies that stay abreast of the latest trends and developments can reap the benefits of success in the consumer electronics industry.