India asks MediaTek to stop favoring Chinese handset brands


India has asked Taiwan’s MediaTek to increase chipset supplies to Indian handset makers like Micromax, Karbonn and Lava International to maintain parity in the market. Notably, these Indian players were recently approved under the production incentive-lined (PLI) scheme by the government and have export targets to meet within this fiscal.

Indian handset makers had alleged that the Taiwanese chipmaker was diverting a major portion of chipsets to Chinese smartphone makers at a time when there is a global shortage of components, impacting their local operations.

Indian handset makers said that the chipset shortage is as severe as over 95% of their overall requirements. They said that the current shortage will dampen their prospects to avail incentives in the first year.

The Economic Times, citing top executives, reported that the Indian government is proactively in touch with the chipmaker to resolve the issue.

MediaTek, which has a commanding market share in the sub-$200 smartphone segment, denied the allegations and said that it always engages equally with its global customers and partners to supply them with chipsets.

The Taiwanese chipmaker said that the entire global semiconductor industry and ecosystem is experiencing various shortages, mainly from supply-chain disruptions due to Covid-19 and other supply and demand market forces.

“The acceleration of global 5G rollouts, for example, is also a contributing factor…“MediaTek also has a long history in India, including support for India-based business, customers and partners. We continually engage with India brands and design houses to ensure state-of-the-art design, development, and delivery of devices in line with their self-reliant strategy,” the chipset maker added,” it said in a statement to Indian media.

India Cellular and Electronic Association (ICEA), which represents home-bred handset companies along with players like Apple, Foxconn and Chinese brands, confirmed the development and said that players like Lava and Micromax are suffering because of the shortage of chipsets.

“The government of India has also taken cognisance and is reaching out through proper channels to MediaTek senior leadership,” ICEA chairman Pakanj Mohindroo was quoted as saying by the publication.

Interestingly, all three Indian brands are trying to make a comeback in India’s smartphone market having lost to Chinese brands two years back. Micromax has already launched its first comeback smartphone, but hasn’t been able to fulfill the demand due to the components and chipset shortage.

Lava International, which has started making Nokia-branded smartphones, is also preparing to launch its own smartphones for the domestic market. The ongoing supply chain issues are likely to impact its smartphone plans.

Mobile handset makers and contract manufacturers that recently received approval under the scheme will shortly write to the Indian government to extend the PLI target timelines.

Due to the supply chain disruption, these companies have not been able to build capacities at their existing and new facilities and said that they would not be able to achieve industry’s target exports worth Rs 50,000 crore ($6.76 billion).

India’s ambitious production-linked incentive (PLI) scheme is already running delayed by two months as the previous plan was to start benefits by August 2020. The delay was on account of differences over whether the Indian Cabinet approval was required for the PLI scheme since it entails investments over Rs 1,000 crore ($135.14 million).

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