Indonesia’s smartphone market remained in the doldrums in Q2, with shipments down 5 per cent year-on-year as new local content regulations have slowed growth, according to a report from Counterpoint Research.

In a market where smartphone penetration is still below 50 per cent, the slowdown is surprising.

Even though the market rose 8 per cent sequentially, after a sharp fall in Q1, Counterpoint senior analyst Jim Lee said there is still a lack of clarity regarding local content sourcing rules.

“The regulations have been largely inconsistent as government continues to tweak the ‘Make in Indonesia’ rules, now making it a ‘multi-tier scheme’ introducing contribution from software as well.” He noted that this will make it even more complex to calculate the real value addition of a brand to the overall production in the country.

With the country’s mobile operators rolling out 4G networks in more than 100 cities over the past year, sales of LTE models have soared – rising 900 per cent year-on-year in Q2.

The government’s push for 30 per cent of content to be sourced locally for LTE smartphones has driven local production, with 88 per cent of the 4G models now manufactured locally.

The top five
Samsung remained on top with a 22 per cent market share, while Oppo climbed to second for the first time with a 17.3 per cent share (see chart below, click to enlarge). Indonesia is now Oppo’s second largest market after China.
Indonesia smartphone Q2
Oppo has invested heavily in domestic manufacturing and distribution channel expansion, and had aggressive offline campaigns targeting the youth through its selfie-centric phones.

Asus was third with a 13.9 per cent share. Its Zenfone C was the fifth bestselling model during the quarter.

Chinese vendors continued to boost their share and accounted for a third of Indonesia’s total smartphone shipments in Q2.

Local brands Evercoss and Smartfren remained in the top five, with market shares of 6.4 per cent and 5.9 per cent, respectively. A shift in strategy for Evercoss to higher ASP phones led to a decline in smartphone shipments during the quarter.

E-commerce channels accounted for 12 per cent of smartphone shipments.

Two-thirds of handset shipments during the quarter were smartphones, and 65 per cent of mobile phones were manufactured in Indonesia.