DEVELOPMENT BANK OF ETHIOPIA

APPLIED RESEARCHE DIRECTORATE

2nd UPDATED RAW DATA AND INFORMATION
ON
MOBILE ASSEMBLING & MARKETING

Prepared by:

Temesgen Bayisa…………………..Team Manager

Mekonnen Fekadu………………. Loan Officer

Revised By:

Antene Mulugeta………………….Team Manager

Million Jarso……………………...Technical Team Manager

Approved By: commodity and market study review and approval team

August, 2023

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ACRONYMS

PCBA Printed circuit board Assembly

IQC Inspection and Quality Control
ITU International Telecommunication Union
ITC International Trade Centre
LCD Liquid Crystal display
PCB Assembled Circuit Boards
GDP Gross Domestic Product
SKD Semi-Knocked down
CKD Completely Knocked down

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Table Of Contents

1. Introduction........................................................................................................................................1

1.1. Back Ground......................................................................................................................................1

1.2. Objective............................................................................................................................................1

1.3. Methodology......................................................................................................................................1

1.4. Scope And Limitation........................................................................................................................2

2. Commodity Description.....................................................................................................................3

2.1. Definition Of The Commodity...........................................................................................................3

2.2. Classification Of Mobile Phone.........................................................................................................3

3. Raw Materials Study..........................................................................................................................4

3.1. Major Materials (Components)..........................................................................................................4

3.2. Other Auxiliary Materials (Consumable Items)................................................................................5

3.3. Availability Of Materials (Components)...........................................................................................5

3.3.1. Supply And Sources Of Raw Materials (Components) And Inputs..............................................5

3.3.2. Utilities...........................................................................................................................................6

3.4. Marketing Arrangement Of Raw Materials.......................................................................................7

3.5. Price Trend.........................................................................................................................................7

4. Technical Study Of Mobile Assembly...............................................................................................8

4.1. Technical Background Of The Commodity.......................................................................................8

4.1.1. Printed Circuit Board Assembly (Pcba).........................................................................................8

4.1.2. Fixing The Pcba To The Casing (Housing)...................................................................................9

4.2. Basic Parts Of Hand Set.....................................................................................................................9

4.3. Assembly Techniques Used On Handset.........................................................................................10

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4.4. Handset Assembly Process Description...........................................................................................11

4.5. Inspection And Quality Control (Iqc)..............................................................................................13

4.6. Utilities Requirements.....................................................................................................................14

4.7. Summary Of Equipment Required For The Assembly Of Electronics............................................15

5. Market Study....................................................................................................................................16

5.1. MARKET SEGMENTATION.............................................................................................................16

5.2. WORLD MARKET..........................................................................................................................16
5.2.1. Global Import-Export...................................................................................................................16
5.3. ETHIOPIAN MARKET.....................................................................................................................18
5.3.1. DOMESTIC SUBSCRIPTION........................................................................................................18
5.3.2. EXPORT.....................................................................................................................................19
5.3.3. IMPORT (SUPPLY).....................................................................................................................19
5.3.4. DOMESTIC PRODUCTION..........................................................................................................20
5.4. MARKETING STRATEGIES.............................................................................................................20
5.5. MARKETING CHANNELS...............................................................................................................21
5.6. MARKET OPPORTUNITY...............................................................................................................21
5.7. PRICE TREND................................................................................................................................21

6. Problems And Key Success Factors................................................................................................22

6.1. PROBLEMS....................................................................................................................................22
6.2. KEY SUCCESS FACTORS...............................................................................................................22

7. Parameters, Technical Coefficients And Assumptions....................................................................24

7.1. BASIC ASSUMPTION......................................................................................................................24

7.2. REVENUE......................................................................................................................................24
7.3. INVESTMENT COST.......................................................................................................................25
7.4. OPERATIONAL COSTS...................................................................................................................25
7.4.1. Current Price Input (Components) Price......................................................................................25
7.5. WORKING CAPITAL DETERMINATION..........................................................................................29
8. REFERENCE.......................................................................................................................................31

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List of Tables

Table 1: List of major components and Inputs of Mobile Assembly...........................................................4

Table 2: List of consumable items...............................................................................................................5
Table 3: Import Trend of major raw materials (kg).....................................................................................6
Table 4: List of Assembly Equipment’s....................................................................................................15
Table 5: Top Ten World Importers of Telephones for cellular networks...................................................16
Table 6: Top Ten World Exporters of Mobile Phone................................................................................17
Table 7: Number of Subscribers (In 000’).................................................................................................18
Table 8; Ethiopia Mobile Phone Export....................................................................................................19
Table 9: Ethiopian Mobile Phone import...................................................................................................19
Table 10: List of Mobile Assemblers Supported by MIDI in Ethiopia with their Capacity.......................20
Table 11: Current factory gate price of sample Mobile Phones.................................................................24
Table 12: Lists of Vehicles........................................................................................................................25
Table 13: Current price of materials and inputs used for mobile Assembly..............................................25
Table 14: Current price of materials and inputs used for mobile Assembly..............................................25
Table 15: Current price of consumable items............................................................................................27
Table 16: Working Capital Determination.................................................................................................29

List of Figures

Fig Figure 1: - Exploded Parts View of a Typical Cell Phone Apparatus..................................................10

Figure 2: - Detailed Assembly Process Flow for Hand Set........................................................................11
Figure 3: - General Assembly Process Flow..............................................................................................12

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 1. INTRODUCTION
1.1. Back Ground
The Ethiopian economy continued to grow in 2021/22 withstanding both domestic and external
challenges. Real GDP grew 6.4 percent slightly higher than 6.3 percent growth in the previous
year. This growth was attributed to 7.6 percent growth in service sector, 6.1 percent increase in
agriculture and 4.9 percent expansion in industry sector. As a result, the share of services in GDP
rose to 40 percent from 39.6 percent a year ago while that of agriculture dropped to 32.4 percent
that of industry to 28.9 percent.

The manufacturing sector growth was higher than the growths’ of the other two sectors due to
the fact that the country is looking for the transformation of its economy from agriculture to
industry. Though, the manufacturing sector of Ethiopia constitutes a small section of the
economy, it has shown significant growth and diversification in recent years. The Ethiopian
government is working hard to expand the manufacturing sector with a view to make the sector
become competitive in the international market.

Telecommunication is one of the prime support services needed for rapid growth and modernization of
various sectors of the economy. Expansion of infrastructure development such as telecommunication
would have significant impact on attracting investment, creating market opportunities, enhancing
competitiveness and boosting regional economic integration.

Mobile (cellular) phone industry is among those that experienced the fastest growths in the
communication industry. Today’s ever-changing modernizations and countless emerging
innovations have resulted in vast improvements in cell phone technology. As a result, the cell
phone industry keeps on growing since this gadget has become an indispensable everyday tool
for everyone in the world.

1.2. Objective
The objective of the study is to produce a document that will serve as a source of up to date raw
data and information (reference) for appraisal of projects related to the sector and for making
proper decision in the process of delivering credit to prospective borrowers.
1.3. Methodology
The study utilizes both primary and secondary data. Primary data were collected through
dispatched questionnaires, interviewing and site visit to Tecno Mobile plc, and Tana

1
Communication plc. Out of existing assemblers, On the other hand, secondary data was obtained
from reviewing of all relevant sources in the internet websites, publication and reports of various
governmental organizations and the main documents of mobile assembly commodity study.

1.4. Scope and Limitation

 Scope

The scope of the study mainly focused on mobile assembling and marketing in Ethiopia. The
study starts from assembled PCBA and imported other components of mobile phone (both
Feature and Smart) phone. This study focuses on SKD because PCBA Assembly commodity
study is already conducted by the directorate and it is not necessary to include in this study. So,
for CKD Plant PCBA Assembly commodity study have to be referred in addition to this study.
 Limitations
Due to absence of organized & well recorded data on mobile assembling sector in Ethiopia
unable to show the price trend of major raw materials and inputs. Beside, some mobile assembler
companies are not willing to provide data and support the research team.

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 2. COMMODITY DESCRIPTION
2.1. Definition of the Commodity
Mobile Phone: also known as a cellular phone, cell phone, hand phone, is a phone that can make
and receive telephone calls over a radio link while moving around a wide geographic area. It
does so by connecting to a cellular network provided by a mobile phone operator, allowing
access to the public telephone network. Mobile phones have increasingly become tools that
consumers use for banking, payments, budgeting, and shopping.

2.2. Classification of Mobile Phone

Mobile phone can be easily classified as follows;

 Smart phones: Smartphone includes devices with touch screens. This smart phone
embeds advanced technology, comparable to the one use for computers. It is priced to
match its capabilities. It runs on a dedicated platform or advanced mobile operating
system.
 Multimedia Phone: Multimedia Phone is a touch screen and/or keypad, but without an
advanced operating system. The Multimedia phone is somewhere between the mobile
and Smartphone. It often designed around one or a few major features (High-resolution
camera, high quality sound or native applications).
 Feature Phones: A feature phone is a class of mobile phone; the term is typically used
as a heteronym to describe low-end mobile phones which are limited in capabilities in
contrast to a modern Smartphone. Feature phones typically provide voice calling and
text messaging functionality, in addition to basic multimedia and internet capabilities,
and other services offered by the user's wireless service provider. Feature Phones have
no touch screen, touch keypad, or advanced operating system. The mobile has a basic
purpose: to help make calls and send SMS messages. These cheap phones are still
popular because of the longevity of their batteries, their sustainable design and their low
price. The above classification is general but as technological advancement grows
different types of mobile phones are introducing through time.

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 3. RAW MATERIALS STUDY
3.1. Major Materials (Components)
Table 1: List of major components and Inputs of Mobile Assembly
Sr. No Types of Components Functional Area
1 PCBA Main board
2 LCD (Screen)
3 Camera
4 SPK(Speaker)
5 Vibartor
6 MIC(Microphone)
7 LED(Torch lamp)
8 Back Cover
9 Speaker Bracket(holder)
10 Speaker Seal Foam(speaker dust net)
11 Main Camera Lens
12 BT Antenna (Bluetooth)
Assembling parts
13 Handset Antistatic PE bag
14 Waterproof Label
15 Screw seal label(Screw Fragile)
16 Front cover (PC+ABS)
17 Battery Cover (White)
18 Battery
19 Keypad
20 Screw
21 LCD lens
22 LCD lens protection film
23 Camera lens protect film
24 Camera Adhesive tape(Myler)
25 LCD Adhesive Tape(Myler)
26 Charger
27 Earphone
28 Gift box
29 User Manual
30 Handset IMEI Label Accessories, packaging-
31 Gift Box IMEI Label
32 Carton box IMEI Label labeling & Marks
33 Carton Seal Label
34 PE bag
35 Glue and scotch tape
36 Gift box Seal Label
Source: Field survey
Remark: Although the number of raw materials varies, the main and required types for mobile assembly

plant are mentioned above

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All the above listed major components/parts are imported from foreign market. In addition there is no

major material or component disparity for diverse types of phone with the same component different size,
features, and measurement is applied for the different classification of phones. The only different
component is keypad which is applied only on feature phone but not assembled to smart phones.
3.2. Other Auxiliary Materials (Consumable Items)
Table 2: List of consumable items
Sr. No Consumable Tools Sources
1 Flux Local and import
2 Iron tips Import
3 Screw Driver Bits Import
4 Soldering Wires Import
5 finger stall Import
6 Face Mask Import
7 Heat Resistance Sponge Import
8 Wrist Strap Import
9 Alcohol Local
10 Test SIM Card Local
11 ATS Contactors Import & Local
12 Carbon Ribbon Import
Source: Field Survey

3.3. Availability of Materials (Components)

Standard items for mobile assembly are imported from abroad. The major suppliers are China,
India, United States of America, Netherlands, Singapore, Malaysia, Thailand, Germany, Japan,
and United Kingdom. Since all raw materials and inputs are available in foreign market, mobile
assemblers can easily access them by increasing or building their purchasing power or capacity.
Carton box used to pack final product, Glue and scotch tape are easily accessible in domestic
market.

3.3.1. Supply and Sources of Raw Materials (Components) and Inputs

Main Supply of raw materials for mobile assembly is derived from import there is no domestic
supplier of each raw material except carton boxes and sometimes glue and scotch tape. The
sector is completely dependent on import about 98% of necessary components and inputs the
team tries to show five years import trend of major raw materials and inputs imported within
country by all assemblers

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Table 3: Import Trend of major raw materials (kg)
Sr
. 202
Component Name Hs Code 2018 2019 2020 2021
N 2
o

1 PCBA Main board 8534000 166,000 59,000 4,000 3,000

0
2 LCD (Screen) 8517700 415,000 418,000 193,000 133,000
0
3 Handset Antistatic 3923219 906,225 1,066,13 903,322 761,934
PE bag 0 7
4 Waterproof Label 4821900 473,711 477,678 247,885 214,715
0
5 Gift box 4817300 96,842 132,682 49,039 14,572
0
6 User Manual 4901990 6,222,647 5,587,21 3,049,11 1,705,34
0 1 6 3
7 Charger 8504500 590,894 695,442 313,684 57,542
0
8 Earphone 8518300 790,649 518,255 174,855
0
9 Battery 8507809 320,623 425,942 47,155
0
10 Keypad （White) 8517700 414,694 418,225 193,045 133,044
0
11 Screw 7318150 5,926,977 5,308,20 5,443,52 4,355,42
0 1 8 7
12 Handset IMEI Label 4821900 473,711 477,678 247,885 214,715
0
13 LCD lens protection 3926909 46,087,13 5,901,83 5,359,05 6,174,42
film 0 4 6 3 9
14 Camera Adhesive 3919900 1,477,077 1,969,45 1,518,95
tape(Myler) 0 4 6
Source: - ITC

3.3.2. Utilities

The following listed materials are used as utilities in mobile assembly factories.
 Fuel: required for vehicles and generator.
 Electricity: For production and office facility purpose
 Water: For office general cleaning and sanitary purpose

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 Oil and Lubricant: For vehicles and machinery
 Alcohol and sponge: used for cleaning and brushing of dusts from the screen and
accessories before assembling operation take place.
3.4. Marketing Arrangement of Raw Materials
As of the information obtained from domestically mobile assembling factories, market
arrangement is basis on the following conditions such as 100% irrevocable LC at sight and
needs 100% payment as per LC approval, Logistics and customs, documents process lead time
lagging , If supplier do not get LC as per agreement within 30 days there will be wave or contract
cancellation and there is high Penalty due to delivery delay to customers in accordance with
agreement then ownership transfer is occurred in the seller destination and all the transportation
cost covered by mobile assemblers.

3.5. Price Trend

Price trend of major raw materials are not found due to lack of data and current price of each raw
materials are listed in the parameter part.

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 4. Technical Study of Mobile Assembly
4.1. Technical Background of the Commodity
Hand set Assembly is the process of assembly of Printed circuit board (PCBA) and fixing it to
the casing. The major component or the heart of any electronic product is PCBA of that specific
product which will be assembled by the electronics assembler, in this case (handset) assembler
company itself. Whereas depending on the assembler interest, the casing/housing/ can be
manufactured by its Owen or can be purchased from suppliers. Handset/assembly is a simple ‘fix
the PCBA of the electronics (Hand set) in our case, to the casing’ process once the PCBA is
assembled. Therefore describing PCBA is almost same as describing handset assembly. Only
few soldering inter connecting parts of the electronic product is done during fixing PCBA to its
casing. Hence, Handset assembly can be seen as a two-step process.

1. Printed circuit board assembly (PCBA) –which its commodity study is already studied
2. Fixing the PCBA to the casing (housing)- which is this commodities main concern

4.1.1. Printed circuit board assembly (PCBA)

Printed circuit board assembly, also known as PCBA, is the process of soldering or assembly of
electronic components to a PCB or printed circuit board. A circuit board prior to assembly of
electronic components is known as PCB. Once electronic components are soldered, the board is
called Printed Circuit Board Assembly (PCBA).

The printed circuit board assemblies commodity study of the bank is already done previously and
this commodity study focus on the assembly of Handset assuming that the PCBA commodity
study will be referred for any electronic assembly request.

It has to be noted that in electronics assembly, it is the electronic components to be placed on the
board (PCB) & design on the board that determines the type of the final electronic product.

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 4.1.2. Fixing the PCBA to the casing (housing)
Once a PCBA is ready, for most electronics, it will be fixed to the casing using screw; SKD level
assembly will be done (soldering very few parts) and tested for different functionality parameter
depending on the product type.

4.2. Basic Parts of Hand Set

For most cell phones, there are three key components: a printed circuit that controls the keypad
and signal reception, a battery, and screen. In addition to the hardware, software is also required
for the phone to operate. Almost all cell phone manufacturers use proprietary software for their
phones. The software is designed by a series of programmers that develop the design of the
interface, the phone's basic/advanced operations, and other features. By default, most modern
phones are programmed with basic features like text messaging, calendar, fax, data, and clock.
After these components and software are determined, the phone moves on to final construction.

In order to study the assembly operations involved in phone manufacturing, all the parts of a
mobile phone units used in assembly plant must be considered. The basic mechanical and
electronic parts found in a mobile phone are circuit board, key pad, speaker micro phone,
antenna, battery and battery connector, LCD (liquid crystal display), structural parts (front and
back housing), handset, hand set connector and SIM card connector. Assembly sequence in
phones basically follows the part-oriented approach. Most of the parts in phone/electronics must
follow specific sequence to be fitted in. The figure below shows exploded view of typical cell
phone parts.

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 Fig

Figure 1: - Exploded Parts View of a Typical Cell Phone Apparatus

4.3. Assembly Techniques Used on Handset
The phone manufacturing and assembly industry is a fast-moving business, dominated by
technical innovations and fashion trends. Products and therefore production – usually change
after less than twelve months. The time and costs involved in such a changeover, for example
for the assembly of mobile phone parts, can now be reduced significantly by making use of
highly flexible automated assembly line.

From the assembly operations, the parts taking place in the assembly process can be joined
with sets of assembly techniques, and the most commonly ways used in the assembly of
phone handsets are: -
(a) Peg-in-hole / Male - Female insertion
(b) Snap Press Fit Assembly
(c) Screw and Pin Fastening.
(d) Notch Locked assembly.
(e) Heat staking and Thermal Seal
(f) Pick-and-Place
(g) Attaching using different adhesives

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 4.4. Handset Assembly Process Description
The Electronics (handset) assembly process is therefore, can start from procurement of not
assembled circuit boards (PCB) and other electronics components from such suppliers. If the
process starts from assembled circuit board, then the assembly process is smooth and easy
having no environmentally un-friendly activity. But its value addition is insignificant and not
recommended. Therefore, electronics assemble production process must start from PCBA
assembly. For this specific commodity study since the PCBA assembly commodity study is
already done the production process will start assuming PCBA assembly is done by the
electronics assemblers as per the banks commodity study on the specific product.

tourch microphone speaker

fix camera
assembly assembly assembly

fix upper fix PCBA in the

fix keypad fix LCD screen
housing lower housing

visual
functionality IMEI number
appearance LCD cover
check assignment
check

packaging

Figure 2: - Detailed Assembly Process Flow for Hand Set

The actual manufacturing of handsets involves the assembly of the hardware and the
installation of the software that will drive the phone. A manufacturer may design and develop
both. Phone manufacture involves continuous research for new designs and the development
of this design into new products with better appearance and functionality. A manufacturer
may design and produce parts by itself, contract parts manufacturer or get the parts from
suppliers and independent manufacturers.

During the actual production, all the parts like the LCD, keypad, antenna, battery,
microphone, and circuit board go through a manufacturer’s assembly line where humans pick

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 them up and put them together into phone units. Each phone then goes for rigorous testing to
ensure that every part and feature – battery, video, keypad, messaging, calling, etc functions
well. Those that failed the quality tests are rejected or reworked. The units whose qualities
have met standards are then packaged, shipped and delivered. Human intervention could
come in the process of installing high-value components, visual inspection and testing.

The assembly processes and sequences followed in every phone assembly varies depending
on the type of technology the factories are using, the detail of assembly i.e. the types of
components, parts, and subassemblies from which the hand set is to be made, etc. In general
assembly of hand set is categorized into three functional groups.

Figure 3: - General Assembly Process Flow

a) Parts Identification and Loading: - Most phone assemblers acquire their parts from
outside suppliers and parts manufacturers. On arrival at the loading dock of the assembly
plant, the parts are shuttled off on forklifts or cranes to storage areas, from which they are
later fetched as needed for production. The first step in the assembly plant is identification of
parts to use; including the battery, hard case, keypad, volume control, Bluetooth enabler and
wired head set socket, as well as the parts that make up the camera and MP3 player
depending on the type of phone to be produced, i.e. basic or advanced hand set. Once the
parts are identified and stored in the plant, the next process is loading reels of desired
components and quantities to the spindles of the assembly line.

b) Parts Assembly: -phone assembly line puts the phone parts together. An assembly line
consists of a row of multiple assembling machines/skilled persons to house the phones while
they are being built. Because the small parts are sensitive to specks of materials like hair and
dusts, the assembly plant need to be conditioned and protected.

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 Furthermore, it is important to maintain the temperature in the room, to ensure that the
machines do not break down due to overheating and the chips do not melt. Keeping the room
between 55 and 65 degrees F is ideal.

Once the parts are put together another essential task by hand follows, i.e. sandwiching the
completed printed circuit board between front and back structural frames, later adding the
outside covers. During the assembly process, each part goes through rigorous quality
controls, to ensure that even the smallest part functions well.

The last step in the production turns a generic phone into one customized to the exacting
specifications of phone users around the world. Each handset is put into a cradle, where it is
given a unique serial number. Then, depending on who the customer is, a unique batch of
software code is loaded on the phone. Finally the phone is passed to the next process station
for rigorous testing of every part and the loaded software. After the phone is tested for
different functionalities it will pass to packaging line.

c) Labeling and Packing of the Hand Set with Accessories: - Commonly phones are packed
into retail boxes by hand, with appropriate documentation and accessories, and then logged
into a tracking system using a bar-code reader. The separately prepared labels describing the
manufacturer, batch number, the country of manufacturing, and other important descriptions
are usually pasted on the package boxes of phones. The boxes of phones are palletized for
mass transportation. Palettes are loaded into trucks on the loading dock, and trucks head out
to the airport, the port, or overland to deliver phones to carriers and retailers to targeted
customers.

4.5. Inspection and Quality Control (IQC)

Phones which completed the parts building process allowed to the QA (Quality Assurance)
department before packaging. The QA analysts perform product testing for each part
functionality, as well as ascertaining the durability of the apparatus. The major test that the
phone is allowed to pass through are the signal, volume, battery power, key pads, screen
resolution, photo, video, Bluetooth, email, Internet, free fall, rotational and other features
depending on the features of the apparatus. If any problem, the hand set would be sent back for
correction. If the item cannot pass the test after correction it is usually goes into the "reject" pile.

13
Whatever type of high-tech assembly and testing system is employed in a phone assembly plant,
it's inspected one last time by an unmatched testing resource of human eye. Usually a tiny
fraction of phones fail this final test. Then, before being packed, the phone is de-ionized to
remove dust and electrical charge from the surface

Features of Automated Phone Test System: -

 Fully automated system
 Fully integrated with all the functional tests integrated in one system
 Highly reliable, flexible, and open for further modification or incorporation of new
tests.
 Continuous production (three, eight-hour shifts, six days a week)
 Reduced test time.
4.6. Utilities Requirements
 Utility Availability

The primary utilities required in the production of electronics are municipal water and electricity.
During the interruption of main power supply, a Generator Set can be used. Moreover for some
sensitive production areas where power interruption cause damage to raw materials and
machines UPS is a must. The total amount of power should be calculated from the specific cases
machine specification.

 Plant Location
The project can be located in any place where there is sufficient availability of electric power
supply and municipal water availability. The preferred locations based on techno-economic
considerations, the typical unit may be set up in the capital cities, big towns or in major urban
areas preferably nearby marketing centers.
Fuels & lubricants, Service and Vehicle Requirement & Machinery & Equipment accessories
needed requirement can be taken from PCBA assembly commodity study of the bank

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 4.7. Summary of equipment required for the assembly of electronics
As depicted in the table below, the tools, equipment needed for the assembly of electronics are
standard. All of these equipment’s are need to be imported.

Table 4: List of Assembly Equipment’s

No General Assembly Equipment Use

There are many testing and performance checking in the
1 Testing Equipment production of the phones. Thus the testing process
requires these equipment
2 Electric Drill (½”) (Pillar Type) To drill holes on sheet metal
Soldering equipment and other hand Individual soldering of hole mounted board components
3
tools normally can be done using soldering equipment
After soldering, the board may pass directly in to an in-
4 Cleaning machine
line cleaning machine
5 Welding machines Welding works require welding machine
6 Industrial computers for checking and assigning IMEI number
Skilled labors work on it and the speed of the conveyor is
7 Working table with conveyor belt
adjusted as per the bottle neck operation and or labor skill
Auxiliary equipment
1 Diesel Generator To supply backup electricity

15
 5. MARKET STUDY
5.1. Market Segmentation

Since the information and communication device industry is one of the most global businesses,
market segmentation of this study considers both domestic and export market. Ethiopia has a
little experience of exporting mobile phones to different African countries and the rest of world.
Export is considered as one and the best strategy by government as well as assemblers to
penetrate the world market.

In Ethiopia, telecommunication service is currently opened to foreign market previously owned

by uni-operator and the market for every telecommunication apparatus depends on the service of
Ethio-telecom. Currently, almost 90% of Ethiopian land cover has network coverage with speed
data. Since communication is one major factor in economic activity, the economic growth
registered in the past years has positive effect on the market of communication apparatus.

On the other hand Ethiopia imports mobile Phone based on market demand. Various kinds of the
information and communication devices are widely imported from abroad because the county’s
technological development is an infant stage and local assembly is dependent on imported spare
parts. So, due to the above reasons, the market study gives more emphasis and provides a brief
look at the domestic market situation as well as export market.
5.2. World Market
5.2.1. Global Import-Export
Table 5: Top Ten World Importers of Telephones for cellular networks
2018 2019 2020 2021 2022
Importers Imported Imported Imported Imported Imported
quantity quantity quantity quantity quantity
456,985,81 416,314,0 379,453,25 811,904,86 22,619,34
World 6 88 4 3 1
11,199,77 14,864,7 33,892,38 37,390,82 14,263,32
Pakistan 8 21 6 1 5
14,668,29 12,185,9 11,550,92 11,535,61 3,795,49
Malaysia 5 73 3 1 1
5,004,89 4,865,87 4,881,10 6,919,39 2,441,40
Nepal 5 0 9 9 9
42 1,626,93
Sri Lanka 0 413 567 8
21,213,9 18,895,86 22,836,48
Thailand - 39 1 7 221,252

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Brunei 156,01 138,46 151,51 134,15
Darussalam 8 0 3 0 111,244
58,43 19,56 53,09 65,19
Bahamas 7 9 5 5 94,949
10,09 16,99 22,14
Tajikistan 6 6 7 4 50,187
Taipei, 2,76 2,57 2,27 2,23
Chinese 8 8 3 8 2,001
6,69 6,70 5,61 3,05
Philippines 9 1 3 9 1,834
Source: ITC
HS code: 851712

Table 6: Top Ten World Exporters of Mobile Phone

2018 2019 2020 2021 2022
Exporters Exported Exported Exported Exported Exported
quantity quantity quantity quantity quantity
1,255,29 1,106, 73,654 358,4
World 1,317 031,685 ,702 08,997 753,959
2,6 2,40 2,
Malaysia 27,512 2,922,858 0,472 319,898 696,668

Pakistan 204,277 10,934 - 27,251 44,602

Bangladesh 5,002

Nepal 14,038 2,742 - 21,570 2,670

Tajikistan - - - - 2,189

Samoa 174 - - - 2,090

Brunei
Darussalam 4,368 1,715 537 1,282 264
Taipei,
Chinese 657 245 356 138 153

Ghana 2,437 5 68

Bahamas 138 103 53 34 48

1,255,29 1,106, 73,654 358,4
World 1,317 031,685 ,702 08,997 753,959
HS code: 85171

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 5.3. Ethiopian Market
5.3.1. Domestic Subscription

Telecommunication is one of the prime support services needed for rapid growth and
modernization of various sectors of the economy. Expansion of infrastructure development such
as telecommunication would have significant impact on attracting investment, creating market
opportunities, enhancing competitiveness and boosting regional economic integration.

Taking this into account, the Ethiopian government has made major investments in telecom
sector to improve service quality, coverage and institutional capacity. As a result, Ethio Telecom
has set ambitious targets to enhance customer acquisition, customer satisfaction and provision of
quality services to its customers.

During 2021/22, total number of Ethio telecom subscribers reached 66.6 million showing 18.4
percent annual increment owing to 18.7 percent rise in mobile voice and 19.6 percent increase in
internet & data subscribers, despite the 3 percent decline in fixed voice service subscribers.

Of the total subscribers, mobile voice accounted for 64.5 million taking the lion’s share of (96.9
percent), followed by internet & data 1.2 million (1.8 percent) and fixed voice service 885
thousand (1.3 percent)

Table 7: Number of Subscribers (In 000’)

Percentage
Service 2020/21 2021/22 Change
Type
Total subscriber base 56,246 66,593 18.4
Mobile voice subscriber 54,329 64,506 18.7
Internet and data 1,005 1,202 19.6
subscriber

Fixed voice service 912 885 -3.0

subscriber
Internet and data user 24,923 26,080 4.6
Mobile voice 54,329 64,506 18.7

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 5.3.2. Export
As per International Trade Centre data, Ethiopia has a little experience in exporting Mobile
Phone since 2018 to 2021G.C. Korea, Republic of, Somalia and Cameron were the major target
market destinations out of total export. The detail export data is listed below in the table below
Table 8; Ethiopia Mobile Phone Export
2018 2019 2020 2021 2022
Exported Exported
Importers Exported Exported Exported
quantity, quantity,
quantity, Tons quantity, Tons quantity,
Tons Tons
World 366 235 65 66 -
Korea, Republic
of 0
Somalia 14
Cameroon 1 4 2 1
China 0 0 0
France 0
Ghana 10 2 3
Guinea 3
Ireland 0
Italy 0
Kenya 56
Source: ITC & HS code: 851712

5.3.3. Import (Supply)

Table 9: Ethiopian Mobile Phone import
2018 2019 2020 2021 2022
Imported Imported Imported Imported
Exporters Imported
quantity, quantity, quantity, quantity,
quantity,
Tons Tons Tons Tons
World 40 116 1013 1017
Korea, Democratic
People's Republic of 0
Korea, Republic of 0 0 0 0
Belgium 0 0
Canada 0 0
China 34 111 914 994
Denmark 0 0 0 0
France 0 0 0
Germany 0 0 0
Hong Kong, China 2 1 94 4
Ireland 0 0
Source: ITC
HS code: 851712

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 5.3.4. Domestic Production
As per the data obtained from Technology development Institute in Ethiopia currently only two
factories which engaged in the assembly of mobile. The domestically assembled Mobile is very
too small as compared to the demand for mobile phone in Ethiopia. This is because of the
majority of phone is imported to Ethiopia illegally by contraband. And the second one is all most
all raw material is imported from abroad. This mainly affects the domestic production of mobile
phone in the country and former some assembler’s factory is closed due to the above mentioned
problems. The detail designed and actual capacity of Mobile assembler is listed in the table
below.

Table 10: List of Mobile Assemblers Supported by MIDI in Ethiopia with their Capacity
S Name of Companies Product type Installed Actual
No. Capacity capacity
(Pcs) (Pcs)
1 TANA Communication PLC Mobile Phones 118,800 6,070
2 TRANSSION Manufacturing plc. Feature Phone 250,000 112,007
(Tecno Mobile) Smart Phone 70,000 10,344
TOTAL Mobile Phones 438,800 128,421
Source: Technology development Institute

5.4. Marketing Strategies

The promotion or advertisement is one of the marketing strategies that the coming Mobile Phone
assembling factories have to focus. It is known that the advertisement cost is higher in the
introduction/ market penetration stages that the factories have also introduces and convince about
the new feature, its application and advantages and thereby meet and exceed the ever growing
customer need in the face of globalization and dynamically improvement of technology.

In line with this, the current market arrangement shows a mobile assemblers use cash base sales
by distributing their products for different electronics sales shops. Some well-known brand
assemblers have their own branding shop and sales so on region as market strategy.

5.5. Marketing Channels

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The marketing channel for mobile phone on open market

Assemblers

Branding shop Agents Institutions &

organizations

End users

The market channel for Mobiles supplied to Ethio-tele is directly from Assemblers to Tele center
based on term of agreement. Ethio-tele distribute free or by discounted price to their customers.

5.6. Market Opportunity

Local market plus export market initiates local supply chain (component level manufacturing). If
local market is secured for assemblers and export market is developed, there will be component
level supply chain in Ethiopia. For export market, Ethiopia has a great advantage due to
Ethiopian Airlines’ strength in air cargo as mobiles are shipped via air.

5.7. Price Trend

The price trend is not found but, current market price of mobile phone is included in parameter
part just to show current market price of sample mobiles.

6. Problems and key Success Factors

6.1. Problems

 Controbands: there are lot of mobile that enter in to the country through illegal way or
contraband which in turn affect the competition power of the local assemblers that still hinder
the market power of domestically established assemblers.

21
 Customer’s perception for local product: - It is obvious that one of the major problems of
developing countries is the perception of customers for local production. The customer
prefers to purchase foreign product rather than local product.
 Price competition: - China’s products are the most rival for the domestic producers in
Ethiopia. As China has wide market at the global level it has the capability to easily cover the
production cost through bulk production and sell at lower price which will negatively affect
the local producers.
 Market and technology volatile with high competition: The demand for products is volatile and
changes dramatically depending on trends including colour, picture quality and different
features and preferences of customers. it needs to follow the trends of such a change
 Power interruption: - Assembling is one of the power consuming industries so that it is
sensitive to power interruption because once power is interrupted it may result in delay of
production.
 Shortage of foreign currency: - The availability of hard currency is not always reliable and
hence the project may face a constraint to import assembly parts. of the factories in the
country, only two factories are currently in production because most of the factories are
closed due to the foreign exchange problem.
 Dependency on import for major raw material

6.2. Key Success Factors

 providing a comfortable and reliable working environment for employees

 Responding to Demand mobile assemblers must have tried to respond to such demand
efficiently by providing customers with technology products based on demand
 Manufacturing capabilities with international quality standards.
 High operational efficiency.
 Well organized management system: Basically, in every business it necessitates to have
well organized management system in order to ensure consistent and stable business
environment. Accordingly, strong management is basic success factors in this industry
because it is a risky business which needs routine and serious supervisions and controls.

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  Create sustainable market chain: mobile phone assemblers must create sustainable
market chain distribution system by using distribution agents, whole sellers, credit based
distribution system and others

7. PARAMETERS, TECHNICAL COEFFICIENTS AND ASSUMPTIONS

This part of the study is devoted in assessment of the coefficients and parameters, which are used
to determine the costs and revenue in preparation Mobile Phone Assembling Industries. The very
important caution which has to be taken by the users of this study is that the parameters and
prices determined are just indicatives, which help understand where the real parameter lays.
7.1. Basic assumption

 Annual working days…………….270

 Number of shift per day…………..1
 Number of hours per shift ………...8

7.2. Revenue
Table 11: Current factory gate price of sample Mobile Phones without VAT

Mobile type Price (birr/piece)

TM1804 579.6
TM1806 579.6
TM1804 830
TM1806 830
Tecno Pova 5 pro 10,708
Tecno Pova 5 12,640
Tecno spark 10Pro 7,237
Tecno pop 7 6,908
Tecno Spark 10 C 6,760
Tecno Spark 10 6,499
Tecno spark 10 5G 8,862
Tecno camon 20 pro 5G 16,804
Source: Field Survey

Remark: The price of Mobile Phones is mysterious and highly determined by the brand. So, the
price listed above is just indicative of current market price, so that assigned team recommends
not relay only the above listed prices in to in revenue calculation.

Export price is not significantly found and manipulated in concerned body; it is therefore found
difficult to incorporate in the parameter part.
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  Conversion factor
Input our put ratio is 1:1 for every component except:

 screw (6 pieces required for one mobile phone)

 For Smart phone 2 cameras are required per mobile

 Defective rate : 3% for SKD; But the defect rate will be 7% for the Mobile phone
assembly firm with PCBA assembly line (CKD)
7.3. Investment Cost

 Vehicles Requirement
Table 12: Lists of Vehicles

Types of Vehicles Purpose

Pickup vehicle For administrative works, Raw material & output transportation
Service vehicles For transportation of employees
Automobile For the manager
Required number of vehicles is variable according to the size of the factory, workload or number
of user.

7.4. Operational Costs

7.4.1. Current price Input (Components) price
Table 13: Current price of materials and inputs used for mobile Assembly
Table 14: Current price of materials and inputs used for mobile Assembly

Unit Price USD

Sr. No Types of Materials (components)
/Pcs
1 PCBA Main board 2.89

2 LCD (Screen) 1.05

3 Camera 0.035

4 SPK(Speaker) 0.03

5 Vibrator -

6 MIC(Microphone) 0.03

7 LED(Torch lamp) 0.03

8 Back Cover 0.035

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9 Speaker Bracket(holder) 0.04

10 Speaker Seal Foam(speaker dust net) 0.03

11 Main Camera Lens/Camera protective glass/ 0.025

12 BT Antenna (Bluetooth) -

13 Handset Antistatic PE bag 0.02

14 Waterproof Label 0.025

15 Screw seal label(Screw Fragile) 0.02

16 Front cover (PC+ABS) 0.03

17 Battery Cover 0.025

18 Gift box 0.015

19 User Manual 0.02

20 Earphone -

21 Battery 1.35

22 Keypad 0.02

23 Screw 0.02

24 Handset IMEI Label 0.02

26 Gift Box IMEI Label 0.02

27 Carton box IMEI Label 0.02

28 Carton Seal Label 0.025

29 Gift box Seal Label 0.02

30 LCD lens 0.04

31 LCD lens protection film 0.025

32 Camera lens protect film 0.025

33 Camera Adhesive tape(Mylar) 0.03

34 Carton 0.03

35 LCD Adhesive Tape(Mylar) 0.03

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 36 DOME 0.025

37 Side key 0.02

38 Electric conductive cloth 0.03

39 LCD light shielding foam 0.03

40 Caron box fireproofing label 0.015

Source; Field survey
Note The price of each input is the price nine months ago. Therefore, the appraising department
should take this into consideration and get the latest price using proforma invoices

Table 15: Current price of consumable items

Sr.No Consumable Tools Unit Unit Price/USD/

1 Flux bottle
1.5
2 Iron tips Pcs
2
3 Screw Driver Bits Pcs
0.5
4 Soldering Wires Roll
26
5 finger stall Set
0.2
6 Face Mask Pcs
0.5
7 Heat Resistance Sponge Pcs
5
8 Wrist Strap Pcs
0.6
9 Alcohol bottle
2
10 Test SIM Card Pcs
0.7
11 ATS Contactors Pcs
160
12 Carbon Ribbon Roll
20
13 Non-dirt cloth set
1.5
14 Protect film roll
2
Source: Field survey
Remark: The price of the consumables is taken from the previous study by thinking that it will
be an indicator or a comparison, because there is only one factory that is currently producing it,

26
because it is not willing to give information and there is no other manufacturer at the moment, so
we could not get the latest price.
The above stated price represented raw materials used for one specific mobile model only. But
raw materials type and price is highly depending on design of the mobile in this sector. So it is
difficult to put representative price for each raw materials since they are not standard
items .hence the price of each raw materials shall be decided based on design of mobile and
required raw materials in accordance with specific design the assemblers demanded.

Note: Carton Box is used to pack four dozen of mobile pieces

Source: Field survey

7.4.2. Overhead Expenses

A. Utility
 Electricity Cost/KWh will depend on the specification of the proposed assembly plant
 Water consumption for domestic purpose and cleaning only.
Note: For Electric and Water tariff, please refer to “Cross Cutting Project Supporting Data,
2022’’ conducted by the Directorate.

B. Fuel and lubricant Cost

Fuel cost
For Automobile: 13-15 Km per liter
For Truck:
Gross Pay Load Distance Fuel Fuel Consumption AVERAGE
Vehicle travelled in one Consumption per Km for each ton lit/km/ton
Weight liter per Km of load
7.5 Ton 3.124 ton 5.840 km/lit 0.171 lit/km 0.055 lit/km/ton 0.035
12 Ton 6.311 ton 5.500 km/lit 0.182 lit/km 0.029 lit/km/ton
18 Ton 10.198 ton 4.540 km/lit 0.220 lit/km 0.022 lit/km/ton

a) For Service Vehicle : 0.013559 lit/seat/ km

b) The cost of oil and grease: 2% of fuel cost
 Travelling expense: The cost of travel and per diem is found to be on average 1.27% of
annual salary.
 Medical expense: 5% of wage and salaries.
 Telephone, post & internet: on average 0.12% of annual sales.
 working clothes ..........................................4.0 USD/pc

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  working shoes ..........................................5.1 USD/pc
 Finger glove 850pc/bag ..........................................7.6 USD/bag
 capes ..........................................0.8 USD/pc
C. Repair and Maintenance
 Building and Construction------2 % of original cost
 Machinery & Equipment--------5 % of original cost
 Furniture and Fixture ------------5 % of original cost
 Vehicles----------------------------10% of original cost

D. Depreciation and Amortization

 Building and Construction----------------5% of original cost
 Machinery & Equipment------------------10% of original cost
 Furniture and Fixture----------------------10% of original cost
 Vehicles------------------------------------20% of original cost
 Generator-----------------------------------10% of original cost

E. Insurance

The following are the major insurance categories surveyed in products assembling
manufacturing industry.
 Third benefited from property and life insurance for vehicle.
 Personal and group insurance for 24 hrs for managers
 Work time insurance and work man composition insurance for employee
 Building-fire & lightning insurance

For insurance premium refers to “Cross Cutting Project Supporting Data, 2022’’ conducted by
the Directorate.

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 7.5. Working Capital Determination

Table 16: Working Capital Determination

Sr. No. Description Period (Months)

1 Salary and wages 1
2 Imported of Components 4
3 Utilities 1
4 Fuel, oil & lubricants 1
5 Electric Bill 1
6 Stationary and office supply 1
7 Advertisement Cost 1
9 Medical expenses 1
10 Sanitary/cleaning materials 1
11 Travel & per diem 1
12 Work in progress depends on the project size , plan and experience

29
 8. REFERENCE

ITC Trade Map

WWW.ITC.COM

Ethio Telecom

Tana Communication PLC.

Transsion manufacturing plc

Metal industry development institute

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