Reliance Jio delays launch of low-cost smartphone amid chip shortage

Reliance Jio’s low-cost smartphone will be put on the market before Diwali because global semi-conductor shortages have forced the company to delay its September 10 launch.

In a late Thursday evening announcement, Jio and partner Google said both companies had begun testing JioPhone Next with a limited set of users for further refinement and were working to make it available more widely for the festive season.

“This additional time will help mitigate the current industry-wide, global semiconductor shortages,” the companies said in a joint press statement.

During Reliance Industries’ annual general meeting in June, Chairman Mukesh Ambani had announced JioPhone Next would be available from Ganesh Chaturthi (September 10).

The 4G-enabled smartphone, to be priced below Rs 5,000, is crucial to Jio’s strategy as it aims to win over 300 million 2G customers. Jio had tied up with Bengaluru-based UTL Neolyncs to manufacture the handsets. The pandemic has led to widespread disruption in the semiconductor chip-manufacturing ecosystem and this has impacted Jio too.

“The entry-level price tier is the most impacted. The prices of certain components have increased by almost 20 per cent. It’s not just the price, the lead time to procure these components has increased significantly from eight weeks earlier to 16-20 weeks for some of them. For Jio it will be about managing the supplies,” said Tarun Pathak of Counterpoint Research.

He added this could mean Jio would have challenges in planning for JioPhone Next and might go for a multiple SKU (stock-keeping units) approach like it did for Jiophone to maintain supplies from a long-term perspective because component shortages are likely to remain for six-eight months

“While leading global smartphone brands have stockpiled components, chip shortages have been affecting smartphone markets across the board. This has led to increased prices for components, making end devices costlier. Smartphone brands have been adopting various strategies to cope with the current short supply, including price increases or limited geographic launches,” said the head of industry intelligence of market research firm CMR, Prabhu Ram.

WAIT GETS LONGER

• The JioPhone Next smartphone, unveiled in June this year, was scheduled to launch on Friday
• Jio tied up with Bengaluru-based UTL Neolyncs to manufacture the handsets
• The 4G-enabled phone, to be priced below Rs 5,000, is crucial to Jio’s strategy as it aims to win over 300 million 2G customers
• India had 435 million smartphone users as of FY21-end. The user base is expected to expand to 668 million by March 2024, according to CLSA estimates

“With JioPhone Next being a pivotal cog for Jio’s goals of featurephone to smartphone migration, it makes sense for Jio to delay its launch and augment chip supplies,” he added.

International brokerage Jefferies estimated an addressable market of 540 million customers for JioPhone Next and up to a 10 per cent revenue upside for Jio in FY23. Jio and Google said they had made progress towards launching JioPhone Next.

“JioPhone Next is a first-of-its-kind device featuring an optimised operating system based on Android and Play Store. The device and the operating system will offer premium capabilities that have until now been associated with more powerful smartphones, including voice-first features that enable people to consume content and navigate the phone in their own language, deliver a great camera experience, and get the latest Android feature and security updates,” the companies said.

JioPhone Next boasts features like Google Assistant, automatic read-aloud, language translation for any on-screen text, and a smart camera with India-centric filters, the companies added.