Top US telecom operators are turning to India to source low-cost mobile phones as the US ratchets up national-security scrutiny of Chinese companies, handing Indian handset makers such as Micromax and Lava an opportunity to win millions of dollars worth of contract-manufacturing orders.

Verizon, T-Mobile, AT&T and Cricket Wireless (a sub-brand of AT&T) have initiated talks with Indian smartphone makers, including Micromax and Lava, to procure unbranded handsets that will be bundled with data subscription contracts in the US, three people aware of the development said on condition of anonymity.

The US telcos’ move to cut their dependence on China comes amid broader trade and geopolitical tensions between Washington and Beijing. The US is also persuading its allies to avoid using Chinese telecom equipment as the world’s largest economy resists China’s domination in the strategic industry.

So far, telecom service providers in the US have typically procured almost all of the low to mid-end mobile devices from Chinese companies such as TCL and ZTE. The increasing scrutiny on Chinese telecom gear has, however, prompted them to look at other options, industry executives said.

Rahul Sharma, co-founder of Micromax, said Vietnam and India are emerging as contract-manufacturing hubs outside China, and Indian companies are well placed to produce such devices for the American market.

“This is a trickle, which can soon turn into a tide for the domestic electronics industry,” said one of the three people cited above. “Till some time ago, Indian companies weren’t even allowed to participate in the bidding process,” the person said.

READ  List Of Samsung Smartphones With Android 10 OS Right Now - Gizbot

Responding to a query, smartphone maker Lava said it has submitted its proposal last week and is awaiting a response from the US procurement agencies. The company already makes smartphones for AT&T in the US. “While the shift started some time ago, the trend has become far more prominent in the past few months with the volume of enquiries steadily picking up,’’ said S.N. Rai, co-founder of Lava. “If the deals work out, it could be nearly Rs. 2,000 crore per year opportunity for the company in the near term,” Rai said. “We have relevance in the entry-level segment because we have good confidence in the supply chain. Brands like Samsung and LG are making a killing in the high-end segment because of the ban on Chinese smartphone maker Huawei,” said Rai.

While US telecom firms still continue to import key hardware parts from China, they are increasingly relying on India to develop software solutions to ensure data privacy, the industry executives said.

According to an August report by telecom industry researcher Canalys, around 70% of all smartphones shipped in the US in the quarter ended 30 June was made in China, up from 60% in the quarter before. The country saw 31.9 million smartphone shipments in the quarter, but the number should rise in the coming quarters as supply chains stabilize from pandemic-induced lockdowns.

About 30% of the US smartphone market is in the sub-$200 or low-end segment, according to analysts. “Tensions between the US and China have escalated in recent years, creating a perpetual state of uncertainty for all smartphone vendors except Samsung and LG,” said Vincent Thielke, an analyst at Canalys.

READ  Judge postpones Trump's TikTok ban in suit brought by users - ABC News

Micromax and Lava are two of the five domestic smartphone makers who have been approved by the Indian government to receive benefits from its new production-linked incentive (PLI) scheme. The scheme offers a 4-6% incentive to smartphone makers for making phones in India.

Domestic handset makers are allowed to avail the benefits for devices with invoice value below Rs. 15,000, while foreign manufacturers such as Foxconn can get benefits for phones with invoice value exceeding that amount. Unbranded phones sold by US telcos usually fall in the sub-$200 price bracket and will benefit from the PLI scheme.

If the Indian companies win the contracts, it will be a shot in the arm for the Indian government’s plan to export smartphones worth Rs. 6.5 trillion from India in the next five years. It will also help Indian companies improve pricing for their own devices in the domestic market, something they have failed to do since Chinese companies entered India. European and other telcos may also follow their US counterparts in sourcing smartphones from Indian companies, industry executives said.



READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here