Google Shifts Pixel Production Out of China Amid Supply Chain Diversification
Google's Strategic Move Away from China
Source: IANS
New Delhi, Aug 18: In light of escalating tensions between the US and China, Google, the American tech powerhouse, is set to cease the production of its Pixel smartphones, smartwatches, and wireless earbuds in China starting next year. This decision is part of a broader strategy to diversify its supply chains, according to a report.
The report from a news outlet, referencing insider information, indicates that Google has been enhancing its manufacturing capabilities in Vietnam and India over the past few years, with plans to completely relocate Pixel production out of China by 2027.
While a significant portion of its production still occurs in China, this shift follows the successful launch of its premium Pixel smartphones manufactured in Vietnam this year. The report notes that producing advanced smartphones is more intricate than making smartwatches and earbuds.
If this transition is executed effectively, Google would become the second major smartphone manufacturer, after Samsung, to entirely relocate its smartphone production outside of China.
The report also highlighted that Google does not market Pixel phones within China, which lessens its dependence on local manufacturing.
Additionally, Google aims to boost Pixel sales despite a notable increase in memory chip prices, informing suppliers to anticipate an 8-10% rise in Pixel shipments this year, up from approximately 12 million units last year.
The company believes that smartphones could attract more users to its Gemini artificial intelligence services, prompting it to pursue growth in Pixel shipments despite rising component costs.
Increased shipments may enhance its bargaining power with memory chip suppliers. Google has combined orders for chips utilized in its cloud computing services with those for smartphones while negotiating with major suppliers like Micron, Samsung, and SK Hynix, as per the report.
An executive from Google's component supply chain remarked that the company is among the few smartphone manufacturers that have not reduced their shipment targets for the year.
Should Apple decide to increase iPhone prices, Google could potentially capture a larger market share in the US, Japan, and Europe, the executive noted.