Business tycoon Mukesh Ambani's attempt to capture the Indian market with a domestically-made Google-powered smartphone is hitting headwinds, with supply-chain delays and rising component prices limiting production levels, revealed a new report.
Ambani's Reliance Industries had hoped for sales in the hundreds of millions in the initial years for the low-cost device, but now expects only a fraction of that at launch, reported The Indian Express citing sources.
The smartphone is expected to be unveiled at the conglomerate's shareholder meeting which is scheduled on 24 June, followed by an official debut in August or September this year.
Chinese competitors such as Xiaomi, Oppo and OnePlus have already created their brands and established local manufacturing facilities to target the Indian consumers, who are upgrading from 2G handsets and tilting towards affordable products.
Ambani aims to use aggressive pricing to reshape the world's fastest-growing smartphone sector, much like he did with wireless services. Any delay in the project, though, would be a major setback for the company and the manufacturing partners.
Engineers from Reliance and Google have collaborated to create a device for the technology-hungry yet price-conscious consumers. It is a project that both the companies started to work on after forming comprehensive cooperation in July 2020.
However, as per the unnamed sources, they have already developed a hardware design and an Android operating system (OS) version that can give a high-end experience without the need for expensive materials.
Reliance has requested local suppliers to increase production capacity in the country so that it can produce up to 200 million smartphones in the next two years. However, obtaining the components proved difficult because the Covid-19 pandemic led to the spike in global demand for electronics which has caused shortages.
Some other issues have also emerged after the collaboration — while the American engineers are being more self-directed, the Indian company depends on a top-down operating paradigm. In contrast to Google's customary tendency for planning things months in advance, the difference has resulted in last-minute decisions and calls in the middle of the night.
Last week, a meeting between Reliance and Google teams failed to produce any decision on the hardware specifications. As crucial components such as screens and chipsets are in short supply and requiring a longer time to buy than usual — 60 to 75 days compared to 30 to 40 days earlier — it has led to an uncertainty in hardware decisions.
According to a person working for an Indian contract manufacturer in talks to assemble the Reliance-Google product, the price of a microprocessor used in a smartphone battery charger has increased in a couple of months, from 5 cents to 9 cents. The source also stated that the display prices have risen by 40 per cent and securing a chipset bulk allotment has become incredibly tough.
Delivery timeframes for so-called surface mount technology machines that can assemble thousands of micro-components for smartphones per hour have jumped to six months, while a few months ago the period was between 45 and 60, said sources.
The issues have been exacerbated by rising shipping price also. According to a worker at an unnamed Indian contract factory, before the pandemic, a 20-foot container from China to India that used to cost $800, had risen to $5,000, and now costs $3,600.
Reports also stated that Google employees in Silicon Valley have been working on the problem of delivering a premium software experience at a previously unheard-of price for nearly nine months. With more economical hardware, the team is facing challenges as they aim to make the OS more responsive and resilient to crashes.
However, to strengthen his technology presence, Ambani has received over $20 billion in investments from American tech giants, including Google, Facebook and Qualcomm. Aside from the new smartphone, the Indian billionaire plans to deliver an update in June on Qualcomm and Facebook's WhatsApp's 5G and e-commerce collaborations.
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