SoftBank, Foxconn Mull Joint Venture for Device Manufacturing in India

SoftBank, Foxconn Mull Joint Venture for Device Manufacturing in India

Japan-based SoftBank (which owns Sprint, among other mobile and fixed network operators) and Taiwan-based Foxconn Technology Group (which manufactures Apple’s iPhone) are in talks to form a joint venture in India to manufacture electronic devices such as smartphones and tablets. The venture would be led by Foxconn and supported by SoftBank, according to remarks made on Monday by SoftBank CEO Masayoshi Son. “We will like to support Make in India programme and vision,” said Son, referring to a campaign for domestic manufacture championed by Prime Minister Narendra Modi. “We are discussing with Foxconn about how we can support Make in India programme jointly where Foxconn will lead and SoftBank will support.” He added, “The details of this is still work in progress. That announcement will be made sometime in near future.”

Tarifica’s Take

With India’s mobile telecom sector booming and data use growing exponentially, there is now a vigorous market for smartphones in the country. Affordability, however, has been a stumbling block for many potential users—as well as for manufacturers of high-end phones, such as Apple. The 16 GB version of the iPhone 6 currently costs the equivalent of approximately US $690.00 in India. If the phones were to be made domestically, the cost would most likely go down dramatically. India could also be a place to produce iPhones for export, which would benefit Foxconn in light of the fact that wages in China, now its main manufacturing center, are rising.

SoftBank’s presence in the joint venture is significant because of the Japanese company’s role as a mobile service provider. Return on investment in mobile networks is not possible unless the appropriate devices are available and affordable. Putting more smartphones into the hands of users all over the world, especially in developing economies, is essential to the future growth of the subscriber base for data services, which will continue to be the key to mobile revenues worldwide. It should also be noted that this potential device manufacturing partnership is being discussed against the backdrop of an actual partnership announced on Monday between SoftBank, Foxconn and Bharti Enterprises, which will invest US $20 billion over 10 years for the development in solar power in India. Presumably the energy generated through this project will help power the country’s mobile networks and devices as they grow.