Chile stands out in Latin America as a lucrative market due to high incomes and developed retail and distribution networks, despite being limited by the small size of its population compared to the US and Brazil. We estimate sales of consumer electronics devices grew 7% in 2013, with many of the trends that drove stronger consumer electronics spending in H212 continuing in 2013. Sales of consumer electronics devices such as tablets and smartphones should remain relatively buoyant and are the largest contributors to market growth. Banks are increasingly willing to extend credit and the unemployment rate remains low, creating a supportive macro environment for growth of spending on consumer electronics devices. There is downside risk to our positive outlook as a significant slowdown in external demand could have an effect on household spending, but the fundamentals of low household penetration of many digital devices, plus growing affordability, should keep the consumer electronics market on an upward trajectory.
Headline Expenditure Projections
Computer sales: US$1.6bn in 2012 to US$1.8bn in 2013, +7% in US dollar terms. Strong unit growth continued in Chile, buoyed by tablets. However, competition from low-cost tablets, as sales shift away from relatively expensive notebooks, has limited increases in market value.
AV sales: US$1.4bn in 2012 to US$1.5bn in 2013, +6% in US dollar terms. Flat-panel TV sets expected to provide the most dynamic area of growth, with prices of Smart TVs, meaning they are still out of reach for the majority of Chileans.
Handset sales: US$376mn in 2012 to US$414mn in 2013, +10% in US dollar terms. Smartphones sales growth makes the handset market hte most dynamic segment of the consumer electronics market.
Key Trends & Developments
- The heightened competition in the PC market since the arrival of a range of Android tablets hitting mass market price points has resulted in declining prices and narrowing margins for notebook vendors.
- Android has grown to become the dominant smartphone operating system in Chile, ahead of Apple's iOS and Microsoft's Windows Phone. Samsung has been the vendor to capitalise most on this trend, but competition from Chinese vendors such as Huawei, ZTE and Lenovo is expected to increase over the short- to medium term.
- Chilean smartphone penetration is now at about 19%, as telcos prepare to launch a new generation of LTE devices. Vendors reported strong growth in smartphone sales in 2012, despite competition from tablets as a rival connectivity device. Chilean operators have taken an active role in trying to grow this market.
- In 2013 there should be solid growth in the Chilean AV device market. Government social programmes and rising household incomes are expected to fuel demand for consumer durables such as TV sets. The approval by Chile's upper house of parliament of a digital TV bill, would boost the country's migration to digital broadcasting. Regulator Subtel continues to implement its TVD Chile digital broadcasting plan and Q412 saw the launch of digital broadcasting in the country's southern Magallanes region.