Tech giant seeks to diversify supply chain following Apple’s lead
Google, a subsidiary of Alphabet Inc., is reportedly in discussions with Indian suppliers for potential partnerships to assemble its popular Pixel smartphones. This strategic move comes as the company aims to diversify its supply chain, taking cues from Apple Inc.’s approach. By exploring assembly options in India, Google aims to reduce its reliance on China as a manufacturing hub.
Initial Talks with Indian Companies: Lava, Dixon, and Bharat FIH
Bloomberg reports that Google has initiated preliminary discussions with several Indian companies, including Lava International Ltd., Dixon Technologies India Ltd., and Bharat FIH (the Indian unit of Foxconn Technology Group). Although the sources requested anonymity due to the sensitive nature of the matter, insiders revealed that Google is actively exploring opportunities for collaboration with Indian suppliers.
Leveraging Prime Minister Modi’s Manufacturing Incentives
Google is keen on engaging potential partners who have secured production-linked financial incentives from Prime Minister Narendra Modi’s government. These incentives have successfully encouraged domestic manufacturing and have already attracted tech giant Apple, which witnessed significant growth in iPhone production in India, surpassing $7 billion in the fiscal year ending in March 2023. Google aims to leverage similar incentives to establish its own production network in India.
India: A Growing Alternative Manufacturing Hub
Prime Minister Modi has been actively positioning India as an attractive alternative to China for global companies seeking to diversify their production locations. Recent events such as China’s strict COVID-19 lockdowns and the ongoing trade war between Washington and Beijing have heightened concerns about overreliance on China. Modi’s visit to the United States this week, where discussions on the removal of tech trade barriers are expected, further highlights India’s efforts to strengthen its position as a manufacturing destination.
High-Level Engagements and Key Executives’ Visits
In May, India’s Technology Minister Ashwini Vaishnaw met with Google CEO Sundar Pichai at the company’s headquarters in California to discuss Modi’s local manufacturing drive and India’s technology initiatives. Executives such as Ana Corrales, the operating chief of Google’s consumer hardware arm, and Maggie Wei, a senior director of global sustaining product operations, visited India this month for partnership talks.
Potential Benefits and Uncertainties
While Google’s discussions with Indian suppliers indicate its intention to expand production beyond China and Vietnam, it remains uncertain whether the talks will result in concrete agreements. Manufacturing Pixel smartphones locally in India could potentially boost sales and enable Google to showcase the capabilities of its flagship hardware product. However, the company may ultimately decide against producing the Pixel in India, as stated by the anonymous sources.
Targeting India’s Growing Market and Competing with Chinese Brands
India represents a key growth market for Google’s services. However, the company has faced stiff competition from affordable Chinese smartphones that have dominated the region. By exploring local assembly options, Google aims to enhance its market presence and leverage its Android operating system and apps to compete effectively in India’s dynamic smartphone market.
As the discussions progress, industry watchers eagerly await further developments and Google’s potential foray into India’s manufacturing landscape.
