Seeking to diversify its supply chain away from China, Google has told its suppliers that it wants to start building its Pixel phones in India starting as soon as next quarter. Besides moving some production out of China, Google is hoping that by building more Pixel units in India, it can sell more phones in the country, the world’s second-largest smartphone market behind China and ahead of the U.S.
According to Nikkei Asia, one person with direct knowledge of Google’s plans says “Google reached a milestone last year for its Pixel phones and it has set an ambitious goal of [shipping] another 10 million units in 2024.” IDC data shows that the Indian smartphone market grew 1% last year to 146 million units which included a much stronger 11% growth rate for the second half of the year.
The first step that Google will make in an attempt to move Pixel production to India is to prep its production lines in the southern part of India to build the Pixel 8 Pro. During the second quarter of this year, Google will start production of the high-end handset in these Indian factories. During the middle of the year, the Pixel 8 will be assembled in factories located in Northern India.
Starting next quarter, Google will build some Pixel 8 Pro units in India
Google already has production facilities in Vietnam churning out Pixel handsets, and even with the small number of units that will be produced in India, the company will be on the way toward reaching its goal of pulling a significant amount of Pixel production out of China. One of Nikkei Asia’s sources said, “Google is not the only tech company that started to look for a ‘China+2’ strategy. That means diversifying away from China into another place is not enough, but suppliers should have multiple non-China options for better supply chain resilience.”
Apple has already been producing some iPhone models in India and as a result, some component and assembly suppliers have opened shop in the country. By selling domestically made phones in India, manufacturers avoid having to add an import tax to the price of their handsets which could price them out of the reach of consumers in the developing market.
Eddie Han, research director of Isaiah Research, told Nikkei Asia, “Google’s decision to move part of its Pixel phone production to Vietnam was prompted by the U.S.-China trade war. As for its extension into manufacturing in India, we believe the company also takes into account the country’s investment incentives, import tariff policies, as well as its massive domestic market.”
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