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Supply chain disruptions, rising component prices, and cultural conflicts with co-branding partner Google are damaging release plans.
People familiar with the matter said that billionaire Mukesh Ambani’s plan to conquer the Indian market with locally assembled Google smartphones is facing resistance, as supply chain disruptions and rising component prices have inhibited production.
People familiar with the matter said that Ambani’s Reliance Industries Ltd. initially envisioned that this cheap device would have sales of hundreds of millions of dollars in the first few years, but now aims to account for only a small portion of it when it launches. People familiar with the matter said that this co-branded mobile phone will be unveiled at the group’s shareholders meeting on June 24, and will be officially unveiled as early as August or September. The plan has not yet been disclosed and requested anonymity.
The tycoon hopes to reshape the fastest-growing smartphone market in the world, just like the way he does wireless services-through aggressive pricing. But any delay in this work will cause a major setback for Reliance and its manufacturing partners in India. Chinese competitors such as Xiaomi, Oppo and OnePlus have established their own brands and established local manufacturing facilities because they are pursuing consumers who upgrade from basic 2G equipment.
Reliance and Alphabet Inc.’s Google engineers teamed up to tailor a device for this technology-hungry but price-sensitive country. The country’s Internet users are expected to exceed 900 million by 2025. They have created a hardware design and a version, according to people familiar with the matter, the Android operating system can provide a high-end experience without expensive materials. However, after the coronavirus pandemic has increased global demand for electronic products and caused shortages, sourcing components has proven to be an obstacle.
People familiar with the matter said that the cultural differences between Reliance and Google also surfaced in the process. The Indian company relies on a top-down operating model, while American engineers are more autonomous. This results in making decisions at the last minute and calling in the middle of the night, which is in stark contrast to Google’s usual preference for planning things months in advance.
Representatives for Google and Reliance did not respond to emails seeking comment.
People familiar with the matter said that until last week, two weeks before the Ambani plan was unveiled, a meeting between the Reliance and Google team failed to reach any final determination on the hardware specifications. Important components such as displays and chipsets are in short supply, and the procurement time is longer than usual, which brings uncertainty to hardware selection decisions.
People familiar with the matter said that due to China’s shortage, the time to obtain such materials has doubled from 30 to 45 days to about 60 to 75 days. China produces and supplies components for almost all smartphones on the planet.
Reliance plans to assemble smartphones locally [Dhiraj Singh/Bloomberg]
According to a person who works for an Indian contract manufacturer, within a few months, the price of microprocessors used in smartphone battery chargers has almost doubled, from 5 cents to 9 cents to assemble Reliance -Google device. The person familiar with the matter said that the price of monitors has soared by 40%, and it turns out that it is extremely difficult to obtain batch distribution of chipsets.
Several people familiar with the matter said that the delivery time of so-called surface mount technology machines that can assemble thousands of smartphone micro-components per hour has reached six months, while the delivery time in the most recent January was 45 to 60 days.
Soaring transportation costs add to the challenge. According to a source at another Indian contract manufacturer, the price of a 20-foot container from China to India was US$800 before the pandemic, soaring to US$5,000, and now the price is US$3,600.
Reliance and Google launched the project after reaching a broad alliance in July last year. For about nine months, Google’s Silicon Valley engineers have been committed to the challenge of providing a quality software experience at an unprecedented price. The team is trying to make the operating system more responsive and resilient to crashes through more frugal hardware. For the company, this is a familiar endeavor, and the company has taken several measures before to make Android more friendly to more basic devices, such as its Android One push.
Ambani has received more than $20 billion in investment from US giants including Facebook Inc., Google and Qualcomm to strengthen his technological influence. In addition to the new smartphones, he will also announce the latest news on 5G and e-commerce cooperation with Qualcomm and Facebook’s WhatsApp this month.
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