The chip shortage is delaying Reliance and Google’s disruption of India’s smartphone market

Set to storm the smartphone market.
Set to storm the smartphone market.
Image: REUTERS/Shailesh Andrade
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The global semiconductor shortage is roiling the manufacture of all sorts of high-tech products, from cars to televisions. Now it’s delaying Reliance and Google’s big plans for India’s smartphone market.

The two companies are partnering to make JioPhone Next, an ultra-cheap 4G smartphone aimed at getting hundreds of millions more Indians onto Jio’s cheap high-speed data network, and further fueling the market for internet services here. The phone’s highly anticipated launch was set for today (Sept. 10), but instead Jio, Reliance Industries’ telecom unit, sent out a release at around 12:30am local time announcing the last-minute postponement of the phone’s unveiling.

The companies said that they had made “considerable progress” on the phone, which is in testing with a limited number of users, and are working toward launching at the Diwali festival season in November, when people often shell out on new products as gifts.

“This additional time will also help mitigate the current industry-wide global semiconductor shortages,” said Jio and Google in a joint statement.

Image for article titled The chip shortage is delaying Reliance and Google’s disruption of India’s smartphone market
Image: Reliance Jio

Indian tech firms are highly dependent on semiconductor imports.

When Jio first began offering phones, news channel NDTV reported that the phones were using components from US chipmaker Qualcomm. Meanwhile, Chinese chipset maker Unisoc, a unit of the financially troubled Tsinghua Unigroup, has said in the past that it is working with Indian phone manufacturers, including Reliance Jio. Recently Jio also announced a partnership with Dutch chip giant NXP for 5G purposes.

The phone itself will initially be manufactured in part by Bangalore-based UTL Neolyncs, Indian financial publication The Economic Times reported.

Reliance declined to comment on queries from Quartz on its semiconductor supply chain for the JioPhone Next.

Reliance and Jio’s smartphone revolution is still coming

The phone may be delayed, but once it is here analysts believe Mukesh Ambani, India’s richest man and Reliance’s chairman, will be able to win over many of India’s 300 million 2G users to their first feature-rich smartphone. That will expand Jio’s existing customer base over 400 million for its 4G internet service.

“It is built for India and it will open up new possibilities for millions of new users who will experience the internet for the very first time,” Sundar Pichai, Google and Alphabet CEO said in June, when the companies offered updates on the phone collaboration they announced last year.

An illustration of content in Hindi on JioPhone Next.
An illustration of content in Hindi on JioPhone Next.

The dual-sim phone is expected to have a 13-megapixel primary camera along with a 5.5-inch touchscreen display and could be priced under 5,000 rupees ($70). Jio began selling phones in 2017, and currently offers feature phones under 3,000 rupees. To cater to India’s many languages and varying levels of education, it’ll offer translation and automatic reading aloud of screen text in a range of Indian languages, as well as a voice assistant and augmented reality filters.

Reliance’s low-cost yet powerful smartphone will likely mean more losses for India’s other telecom companies, as well as new competition for the Chinese smartphone makers that dominate India’s price-conscious market.

Brokerage firm Jefferies said last week that JioPhone Next could increase Reliance revenues by as much as 10% in its financial year beginning April 2022, but could negatively impact revenues for Bharti Airtel, India’s second-biggest telecom service provider, by at least 3%.