Xiaomi Exec Weighs In on Why India Can’t Make a Smartphone From Scratch

The escalating COVID-19 disaster and the current border conflict have led to an increase in anti-China sentiments in India. Trends to boycott Chinese merchandise have plagued social media within the current weeks, and whereas the tweets are an important instance of patriotism, India is way from being self-reliant in the case of client electronics manufacturing – particularly smartphones. The smartphone phase in India is especially dominated by Chinese manufacturers. Xiaomi’s Anuj Sharma on Thursday weighed in on why it is not but attainable to 100 p.c make a smartphone in India. The nation has a number of hurdles to cross earlier than it might probably begin constructing good-quality smartphones from scratch, however analysts really feel that if the correct steps are taken instantly, the nation might attain its objective 5 to seven years from now.

Lack of semiconductor wafer fabrication (FAB) models

Possibly the most important hurdle to 100 p.c Make in India for smartphones is the absence of semiconductor wafer fabrication (FAB) models within the nation, additionally simply known as fabs, says Xiaomi’s advertising and marketing head Anuj Sharma. He opines that the most important problem for India will likely be to arrange silicon foundries or fabs. He cites Wikipedia to say India has just one fab, one which operated by ISRO and fabricates chips on a 200nm course of. Fabs make semiconductor chips – a vital part present in smartphones, tablets, and even PCs of right this moment. Sharma says there are only some fabs on the earth, and the main ones – TSMC and UMC – are in Taiwan.

It takes billions of {dollars} of funding to construct these foundries, Sharma provides, and cites setup prices for TSMC’s 28nm fab as $9.three billion in 2010, and experiences for similar firm’s prices for its upcoming 3nm fab to be $23 billion. He places this in perspective in opposition to the entire FDI expenditure in India in 2019, which was $49 billion as per a UN report. He can also be of the opinion that it’s going to take years, if not many years, to construct a high-tech sector in India, even when the correct funding is available in.

Research Director – Devices and Ecosystem, IDC India and South Asia, Navkendar Singh advised Gadgets 360, “India needs to graduate from the low end of the value chain to upstream parts of the manufacturing value chain like FAB setups, display panels. These are some of the most critical, high value and specialized parts of the smartphone manufacturing which calls for long term commitment (read 20 to 30 years) , billions of dollars of capital expenditure and operational expenditure, readily available uninterrupted resources like water, electricity and highly skilled workforce.” Singh provides that even when India begins to behave instantly and attracts international firms to arrange base in India, it might take about 5 to seven years from now, for manufacturing 100 p.c of the smartphone in India.

Lack of presidency assist to assist native manufacturers thrive

While constructing silicon chips is one massive hurdle, Founder and Chief Analyst at techARC, Faisal Kawoosa feels that India must work in direction of pushing native manufacturers and assist them emerge profitable within the international house. “We are not doing much for our local brands. We have to do an extra bit for them to help them grow and emerge as successful brands in the smartphone space.”

“The government has to create a special package within the overall schemes that helps local brands grow and compete with global brands,” Kawoosa advised Gadgets 360.

Counterpoint Research Analyst, Mobile Devices and Ecosystems, Varun Mishra additionally feels that help of the federal government is very important, particularly in these instances, “In the current global scenario, India is in a uniquely favourable position to benefit from China +1 strategy. It will not be an overnight shift from China to India, but companies will scale up their investments in India and reduce some exposure from China. India is gradually becoming a premier destination for the manufacturing supply chain.”

Mishra provides, “To harness this potential, the ecosystem players in India need to invest locally with the support of the government. The focus needs to be on multiple fronts like policies, incentives, trade deals with other regions, labor costs, and infrastructure. We have an edge on some factors like labor costs but work still needs to be done on other fronts. Facilities like a single point of contact for all clearances to set up a business will also help in ease of doing business and attracting players. The upfront investment could be huge, but the overall benefits of building a local ecosystem will far outweigh the cost in the longer term.”

Lack of R&D parks

Kawoosa provides that one other core space that the nation lacks in is analysis and improvement. “We are almost zero on core R&D, product development and design. I think here the government could announce a special support, say for instance inviting only local brands to invest in a R&D park where the government matches the funding raised by the local OEMs. This centre could act as the hub for R&D and Indian OEMs could synergise and leverage from each-other’s strengths,” he envisions.

Mishra from Counterpoint additionally feels that R&D dependency is prone to stay with abroad markets like China, Korea, and Taiwan which have pioneered the phase by long run funding in R&D and the native manufacturing ecosystem.

Need for large Indian tech firms to put money into digital manufacturing

These are simply a few of the major hurdles that India faces in changing into fully self-reliant in smartphone manufacturing. Kawoosa says that the nation lacks know-how know-how, has scarcity of superior abilities, and far more. He additionally feels that big-wigs like RIL, Mahindra, and Tata ought to enterprise into electronics manufacturing as they’re nicely geared up to pump cash to construct the infrastructure required to create a globally aggressive smartphone model.

To construct a smartphone requires a number of elements to come back collectively, and age-old veterans like Apple and Google nonetheless depend on firms in numerous geographies and areas. The smartphone part provide chain is very interdependent and due to this fact to fabricate a smartphone in a single nation isn’t one thing that may achieved simply.