Component Shortage In China Handicaps Jio’s 5G Smartphone Plans

SUMMARY

It was expected that Reliance Industries’ digital venture Jio Platforms will launch its first low-cost 5G smartphone in partnership with tech giant and investor Google at its annual general meeting (AGM) on June 24

The high demand for components globally has hit the production plans of the smartphone

The timeline for procuring parts like components like chipsets and display have increased from 30-45 days to 60-75 days

Mukesh Ambani-led Reliance Jio’s plans to roll out a low cost smartphone in partnership with global tech giant Google may be delayed due to a shortage of essential components, according to reports.

It was expected that Reliance Industries’ digital venture Jio Platforms will announce the launch its first low-cost 5G smartphone in partnership with tech giant and investor Google at its annual general meeting (AGM) on June 24. Besides this, the company will also be launching its low-cost laptop range JioBook this year, which was earlier said to be powered by JioOS.

However, the company may scale down the initial launch as it faces issues in sourcing electronic components, reported TOI. Reliance Jio and Google teams have reportedly built a low cost version of the Android OS that can work with cheaper components. However, the high demand for components globally has hit the production plans of the smartphone.

The timeline for procuring parts like components like chipsets and display have increased from 30-45 days to 60-75 days due to shortages in China, people in the know were quoted as saying. Even the cost of several components have shot up by 40-80%.

The development of the Jio 5G smartphone is part of two-pronged alliance with Google. First, Google picked up 7.73% stake in Jio Platforms last June for INR 33,737 Cr. Second, both the companies have a commercial agreement to jointly develop an entry-level 4G smartphone that can support 5G in the future.

Entry-level smartphones in the sub-INR 5K range have been struggling due to low demand and high distribution cost. According to research firm International Data Corporation (IDC), this segment accounts for less than 5% of the Indian smartphone market where 22 Mn handsets were sold in October 2020. This market is mostly dominated by Xiaomi, Lava, Itel and Samsung. But many of these handset makers have reduced their product portfolio in this category due to the unviable cost dynamics. Now that Jio plans to enter this market, the company is expected to convert its 120 Mn-odd feature phone users and help them switch to affordable smartphones. Which means unlike other contenders, Jio already has a potential market here that can be easily leveraged.

Besides smartphones and laptops, Reliance Jio is also working on a next-gen JioGlass mixed reality device for 3D and virtual interactions, with potential applications in the industrial and manufacturing sector. The Jio Glass is expected to be a lightweight device connected to a smartphone. The company has said that it will come with 25 in-built apps to allow augmented reality video meetings and more. The product would be powered by Jio’s indigenous 5G solution.