A slight quarter-on-quarter (QoQ) drop of 7% has been recorded in the total smartphone shipment in Indonesia in 2016Q3 based on International Data Corp.’s (IDC) latest Quarterly Mobile Phone Tracker.

Although there is a light change, it still shows a moderate increase of 4% over the same period last year.

“After the peak season of Lebaran ended, a stretch of quiet business begun in 2016Q3 which forced smartphone vendors to lower their shipment and focus more on improving the sales performance as well as laying the groundwork in anticipation of the peak shopping season in 2016Q4, ” said Reza Haryo, senior market analyst, Client Devices, IDC Indonesia.

The share of 4G phones has also increased from 58% in 2016Q2 to 68% in 2016Q3 and had 8% sequential growth. This is due to the fact that telco service providers have been competing to expand their market share in a bid to capitalise on the growing number of smartphone users in the country through data bundling packages. In line with this expansion, the portion of smartphones sold in telco channel has also increased 22% YoY. “Most of the volumes came from major vendors such Samsung, OPPO and Asus. Samsung’s Galaxy J7, OPPO’s F1s and Asus’ Zenfone Selfie were among the most popular models,” Haryo added.

IDC maintains the forecast for 2016 as the market is expected to expand significantly in Q4 and high demand during the festive season will allow vendors to increase shipment volume to reach targets. Also, the continuous economic improvement from heavy infrastructure investment will continue to boost the Indonesian economy.

The Local Content regulation (TKDN) is getting more accepted in a sense of clearer approach. Vendors including Xiaomi, LG and BlackBerry have now showed commitment to comply with this regulation. In the short term, it is expected that the industry will be focusing on local assembly but the challenge remains from the inadequate component supply chain ecosystem. But in the longer term, depending on the effectiveness of incentives provided by the government, more component manufacturers could move to Indonesia. So, vendors should be prepared to have end-to-end manufacturing in Indonesia instead of just assembly.