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    Google plans to begin Pixel phone production in India in Q2

    Glasgow, Scotland - A woman holding a Google Pixel 8 Pro smartphone, showing the cameras and other sensors on the rear of the phone.

    Source: Nikkei Asia

    Google has told suppliers to start making its Pixel smartphones in India by the next quarter at the earliest, underlining the American search engine giant’s determination to further diversify its supply chain away from China and capture the booming Indian smartphone market, Nikkei Asia has learned.

    The supply chain strategy is part of Google’s ambitious target of shipping more than 10 million Pixel phones this year, after shipping around 10 million units for the first time in 2023 amid a global economic slowdown, said one person with direct knowledge of the matter.

    Google will first prepare the production line for its high-end Pixel 8 Pro in the southern part of India in the coming weeks, then begin turning out phones in the April-June quarter, according to multiple sources familiar with the plan. This will be followed by production of the Pixel 8 in the north of the country around the middle of this year, they said.

    There are emerging smartphone manufacturing hubs in both of these parts of the country, thanks to companies like Apple, Samsung, Oppo and Xiaomi bringing several assembly and component suppliers into India in recent years.

    While Google’s India Pixel production will begin with a small volume, the move marks a crucial shift in the supply chain strategy for the company, which has already had suppliers making its phones in Vietnam for years amid an escalating tech war between Washington and Beijing. Previously, the majority of Google’s Pixel phones were produced in China.  

    “Google is not the only tech company that started to look for a ‘China+2’ strategy. That means diversifying away from China into another place is not enough, but suppliers should have multiple non-China options for better supply chain resilience,” one of the sources said.

    The company announced last year that its first made-in-India Pixel phones will be available this year, joining Apple and Samsung in tapping the massive and growing Indian market at a time when the overall smartphone industry is slowing.

    The Indian smartphone market grew 1% on the year to 146 million units in 2023, with the pace of growth in the second half of the year hitting 11% versus the previous year, research agency IDC’s data showed. That compares with a 4.7% overall decline in the global smartphone market in 2023. China, the world’s biggest smartphone market, saw a 5% drop last year, IDC’s data showed.

    “Google reached a milestone last year for its Pixel phones and it has set an ambitious goal of [shipping] another 10 million units in 2024,” another source with direct knowledge told Nikkei Asia. Keeping Google’s Pixel phone business thriving is important for the sustainability of its search engine and mobile operating system ecosystem when Huawei’s HarmonyOS user base is growing and Samsung — the world’s biggest smartphone maker — attempted to switch its mobile phone default search engine, the person added.

    Google’s phone manufacturing plans also come as the Indian government makes an aggressive push to turn the country into a tech manufacturing powerhouse by offering incentives and weighing tighter import restrictions to attract companies to build local supply chains for mobile devices and personal computers. Apple has told suppliers to accelerate their investments in India to quickly build its iPhone supply chain ecosystem outside of China. Taiwan’s Acer and Asustek Computer, two of the world’s biggest PC makers, also have plans to step up production in the country this year, Nikkei Asia reported. 

    “Google’s decision to move part of its Pixel phone production to Vietnam was prompted by the U.S.-China trade war. As for its extension into manufacturing in India, we believe the company also takes into account the country’s investment incentives, import tariff policies, as well as its massive domestic market,” Eddie Han, research director of Isaiah Research, told Nikkei Asia. 

    Han said in addition to Google, Samsung also has two manufacturing hubs outside of China, in Vietnam and India, for its smartphones.