Pakistan: The Next Electronics Manufacturing Hub?

[Riaz Haq]

Soaring demand for consumer electronics and low labor costs are attracting major global smartphone manufacturers like Samsung to Pakistan. In 2021, local manufacturers produced 25 million handsets, up a whopping 88% increase from 13 million produced in 2020. A key factor credited for this rapid production ramp-up is the new Mobile Device Manufacturing Policy announced and implemented by former Prime Minister Imran Khan's government in 2020. It imposes high tariffs on the import of mobile phone sets and offers tax rebates for local manufacturing. The policy set a 49% localization target by June 2023, including 10% localization of components on the motherboard and 10% localization of batteries.  Pakistan is forecast to be the world's 7th largest consumer market by 2030. The key to attracting more manufacturing in Pakistan lies in continuation of pro-investment policies and a measure of political stability. 

Pakistan Going From Imports to Exports of Mobile Handsets. Source: ...

The local manufacturing plants have assembled 14.08 million mobile phone handsets in the first six months (January-June) of 2022, while imports declined to 1.14 million handsets, according to the Pakistan Telecommunication Authority (PTA). Implementation of Device Identification Registration and Blocking System (DIRBS) and conducive government policies including the Mobile Device Manufacturing Policy 2020 have created a favorable environment for mobile device manufacturing in Pakistan.

Pakistan Mobile Phone Market. Source: PIDE

In addition to Samsung, a number of Chinese mobile handset manufacturers are investing in Pakistan to ramp up local production. Itel has manufactured 3.91 million mobile devices followed by VGO Tel's 2.97 million, Infinix 2.65 million, Vivo 2.45 million, Techno 1.87 million, QQMEE 0.86 million and Oppo 0.67 million. After the export of the first lot of 4G smartphones to the UAE in 2022, Pakistan has now set $1 billion target for mobile phone exports for the current fiscal year. 

Pakistan Telecom Indicators. Source: PTA

Pakistan wants to emulate Vietnam which has emerged as one of the leading countries in the assembly and export of smartphones and other consumer electronics devices in the past decade. Apple has recently moved part of its iPad manufacturing to Vietnam from China, where Covid lockdowns have disrupted supply chains.  TRT World has recently quoted Quentin D’Silva, the head of Lucky's smartphone division in Pakistan, as saying, “It’s only in the last five to seven years that the smartphone business has mushroomed in developing countries like ours". 

Related Links:

 Haq's Musings

South Asia Investor Review

Unprecedented Tech Boom in Pakistan

State Bank of Pakistan Plans Digital Currency By 2025

Pakistan Broadband Subscriptions Pass 100 Million

Brothers From Rural Pakistan Teaching AI to American High Schoolers

Pakistan's Computer Services Exports Jump 26% Amid Coronavirus Lock...

Pakistan Gig Economy Among World's Fastest Growing

Digital BRI and 5G in Pakistan

Pakistan's Demographic Dividend

Pakistan EdTech and FinTech Startups

State Bank Targets Fully Digital Economy in Pakistan

Campaign of Fear Against CPEC

Fintech Revolution in Pakistan

E-Commerce in Pakistan

2021: A Banner Year For Pakistani Tech Startups

FMCG Boom in Pakistan

Belt Road Forum 2019

Fiber Network Growth in Pakistan

Riaz Haq's Youtube Channel

PakAlumni: Pakistani Social Network

[Riaz Haq]

The world’s biggest bet on India
What Tata’s $90bn pivot to its home market says about the planet’s fifth-biggest economy

https://www.economist.com/business/2022/09/14/the-worlds-biggest-be...

If you want to glimpse the frontier of Indian capitalism, take a trip to Tamil Nadu in the south of the country. New factories with solar panels on their roofs lie on a vast 550-acre (220-hectare) site. Inside, it is reported, Tata is making components for the latest iPhones on behalf of Apple—and in the process finally connecting India to the world’s most sophisticated supply chain, which used to be anchored to China.

The project is not a one-off. It is part of a new and staggering $90bn investment surge by India’s biggest business that is repositioning itself towards its home market and away from its 30-year strategy of fanning out globally. Tata’s ambition to create electronics factories and semiconductor fabs in India could transform its economy. “I firmly believe that this is going to be India’s decade,” says Natarajan Chandrasekaran, who runs the holding company, Tata Sons, which oversees the group. The change in strategy also reflects the dramatic psychological shift within the business world’s most ardent globalisers, as they adapt to new megatrends. These include the rebasing of strategic manufacturing away from China; the rise of a new energy system; and industrial policy, which in India is being championed by Prime Minister Narendra Modi.

Anyone who follows India, the world’s fastest-growing big economy, may be under the impression that it is run by Mukesh Ambani and Gautam Adani, two swaggering tycoons, whose conglomerates generate headlines and make them Asia’s richest men. Together the “two As” may spend over $100bn in the next five years. Yet Tata is in fact the country’s biggest business measured by market value ($269bn) and operating profits ($16bn last year), spanning everything from steel mills to software. And we estimate that its new plans are larger than any other individual firm’s, encompassing electric vehicles (evs), electronics, battery gigafactories, clean power and chips (see chart 1). If that doesn’t sound ambitious enough, it has also taken on the Everest of corporate turnarounds, buying Air India.

--------

But even Tata, which considers itself aloof from politics, has paid symbolic homage to Mr Modi’s populist nationalism. In 2019 Mr Tata visited the headquarters of the rss, the Hindu-chauvinist association that backs Mr Modi. In the same year Mr Modi attended the launch of a book by Mr Chandrasekaran. The Tata charities are also working more closely with the state, for example on hospitals. And Tata is participating in India’s $26bn manufacturing-subsidy scheme (though it insists the handouts are too small to swing investment decisions).

[Riaz Haq]

Pakistan Exports 120,000 Locally Manufactured Mobile Phones

https://propakistani.pk/2022/12/14/pakistan-exports-120000-locally-...

The export ceremony of locally manufactured mobile phones by Pakistan Telecommunication Authority (PTA) Authorization holder Inovi Telecom was held at PTA headquarters today.

The ceremony was held to mark Inovi’s achievement of the export of 120,000 locally made mobile phones of the SEGO brand to the United Arab Emirates for African markets.


---------
Inovi Telecom is the first company to export locally manufactured mobile phones in large quantities. Inovi’s CEO appreciated PTA for its active support and for taking measures to help bolster the mobile industry. Moreover, both PTA Members extended their continued support for the development of a mobile device manufacturing ecosystem in Pakistan.

Inovi Telecom Pvt. Ltd was issued Mobile Device Manufacturing Authorization on 9th April 2021 in accordance with the PTA Mobile Device Manufacturing (MDM) Regulations, 2021.

[Riaz Haq]

#Pakistan Made Nearly 20 Million #MobilePhones in 11 Months of CY2022. Last year (CY 2021) Pakistan assembled/manufactured 24.66 million compared to 13.05 million in 2020 – an 88 percent jump. #manufacturing #smartphones https://propakistani.pk/2022/12/26/pakistan-made-nearly-20-million-...

The local manufacturing plants manufactured/assembled 1.56 million mobile phone handsets in November 2022.

The manufactured/assembled mobile phone handsets by local manufacturing plants during the calendar year 2021 stood at 24.66 million compared to 13.05 million in 2020 – a landmark increase of 88 percent.

The commercial imports of mobile phone handsets stood at 10.26 million in 2021 compared to 24.51 million in 2020, revealed the official data of the Pakistan Telecommunication Authority (PTA).

The locally manufactured/assembled 19.7 million mobile phones handsets included 11.5 million 2G and 8.2 million smartphones.

Besides, as per the PTA data, 55 percent of mobile devices are smartphones, and 45 percent are 2G on the Pakistan network.

However, despite the increase in the local production of mobile phones, Pakistan imported mobile phones worth $290.570 million during the first five months (July-November) of the current fiscal year 2022-23, registering a negative growth of 66.08 percent when compared to $856.730 million during the same period of last year.

Pakistan Bureau of Statistics (PBS) data shows that on a month-on-month (MoM) basis mobile phone imports registered 1.92 percent negative growth and stood at $64.520 million in November 2022 when compared to $65.780 million in October 2022.

Mobile phone imports registered 69.57 percent negative growth on a year-on-year (YoY) basis in November 2022 when compared to $212.058 million during the same month of last year. The overall telecom imports into the country stood at $455.731 million during the first five months of the fiscal year 2022-23 and registered 59.67 percent negative growth when compared to $1.130 billion during the same period of last fiscal year.


The successful implementation of the Device Identification Registration and Blocking System (DIRBS) along with conducive government policies including the mobile manufacturing policy has created a favorable environment for mobile device manufacturing in Pakistan.

[Riaz Haq]

iPhone Exports from India Double to Surpass $2.5 Billion


https://www.bloomberg.com/news/articles/2023-01-09/iphone-exports-f...

Foxconn Technology Group and Wistron Corp. have each shipped more than $1 billion of Apple’s marquee devices abroad in the first nine months of the fiscal year ending March 2023, people familiar with the matter said. Pegatron Corp., another major contract manufacturer for Apple, is on track to move about $500 million of the gadgets overseas by the end of January, the people said, asking not to be identified revealing private information.

Apple’s rapidly growing export numbers illustrate how it is ramping up operations outside of China, where chaos at Foxconn’s main plant in Zhengzhou exposed vulnerabilities in the Cupertino-headquartered company’s supply chain and forced it to trim output estimates. That compounded a broader problem with evaporating demand for electronics as consumers weigh the risks of a global recession.

Apple, the world’s most valuable company, began assembling its latest iPhone models in India only last year, a significant break from its practice of reserving much of that for giant Chinese factories run by its main Taiwanese assemblers including Foxconn.

While India makes up just a fraction of iPhone output, rising exports bode well for Prime Minister Narendra Modi’s plan to make the country an alternative to China as factory to the world.

China’s Covid Zero policies and an episode of violence at the Zhengzhou plant — nicknamed iPhone City as the world’s biggest production center for the device — laid bare the dangers of relying on the country. While Beijing has since dropped that approach to containing the virus, Apple and other global names are exploring alternative locations more than ever before.

India’s vast workforce, Modi’s support and a thriving local market make it a prime candidate to take on more electronics manufacturing. Foxconn, Apple’s largest supplier, began building facilities in the country more than five years ago in anticipation of a need to extend its geographic range.

One recent selling point is a raft of new government incentives, a cornerstone of Modi’s drive to make India an electronics manufacturing hub. Foxconn has won 3.6 billion rupees ($44 million) of benefits in the first year of the so-called production-linked incentives scheme, while Wistron’s claims are currently being processed, the people said.


Representatives for Apple, Foxconn and Wistron didn’t respond to emails seeking comment. A Pegatron spokesperson declined to comment.

Apple’s contract manufacturers currently make iPhones at plants in southern India. But production in the country is just beginning. About 3 million of the devices were made in India in 2021, compared with 230 million in China, according to Bloomberg Intelligence estimates.

Foxconn began making the iPhone 14 in India a few months ago — sooner than anticipated — after a surprisingly smooth production rollout that slashed the lag between Chinese and Indian output from months to mere weeks. Apple’s three Taiwanese partners currently assemble iPhones 11 to 14 in India.

But moving out of China, where Apple has built a deep supply chain for close to two decades, isn’t easy. A Bloomberg Intelligence analysis estimated it would take about eight years to move just 10% of Apple’s production capacity out of China, where roughly 98% of the company’s iPhones are being made.

India tracks production and exports of all smartphone makers who enjoy financial incentives as part of Modi’s push.

Beyond smartphones, the country is drawing up plans to boost financial incentives for tablet and laptop makers, hoping to woo Apple to make everything from earphones to MacBooks locally as well as attract other brands. The iPhone maker is also expected to open its first retail store in India in 2023, after meeting certain criteria imposed on foreign retailers.

[Riaz Haq]

Mobile policy attracts 36 companies to manufacture smartphones in the country

https://profit.pakistantoday.com.pk/2023/01/23/mobile-policy-attrac...


Like the auto industry in Pakistan, the mobile phone industry has also attracted at least 36 companies to manufacture/assemble smartphones under the policies introduced by the government in 2020.

According to officials, the ‘Make in Pakistan’ policy introduced by the previous Imran Khan government has resulted in the establishment of 31 companies which manufacture a great number of renowned international mobile phone brands in the country.

As per the data, local manufacturing plants have manufactured over 19.7 million phone handsets during the first 11 months of 2022 compared to just 1.37 million commercially imported phone handsets. Data provided by the Pakistan Telecommunication Authority (PTA) reveals that the local manufacturing plants assembled 1.56 million mobile phone handsets in November 2022

Despite the increase in local production, the country imported mobile phones worth $ 290.57 million during the first five months (July-November) of the current fiscal year 2022-23. However, this was a decrease of 66.08 percent when compared to the imports of the same period last year at $ 856.73 million.

To review further expansion and issues related to the newly flourishing industry, the Ministry of Industries & Production (MoI&P) will hold a mobile device manufacturing summit on Tuesday (today). As per the officials of the Engineering Development Board (EDB), the relevant department of the MoI&P is jointly organising the summit in collaboration with the Pakistan Mobile Phone Manufacturers Association.

The summit will be addressed by the Federal Minister for Board of Investment, Chaudhry Salik Hussain, and will also include an exhibition of technology and products by the members of association including Xiaomi, Realmi, Infinix, Tecno, Itel, Alcatel, G-Five, Oppo, Vivo, Premier Code etc. The exhibition will be open for targeted general public.

According to officials, the purpose of organising this summit-cum-exhibition is to get input from all the relevant stakeholders which includes mobile device manufacturers, government officials from MoI&P, PTA, Ministry of Commerce, National Tariff Commission, Board of Investment, Ministry of IT & Telecom, Federal Board of Revenue and academia to boost local assembly of mobile devices through enhancing investment and employment opportunities in this sector.

The summit will focus on the localisation of parts and components used in mobile manufacturing, localisation of allied equipment like laptops and tablets, targeting export of mobile phones and promoting ease of doing business in Pakistan. The mobile device manufacturing sector is expected to benefit from this summit as it will facilitate further collaborations with international counterparts which can enhance the competitiveness of the sector.

The mobile device manufacturing policy was formulated by EDB in 2020 with the aim to promote local manufacturing of mobile devices in Pakistan and to provide an attractive environment for investors under the “Make in Pakistan” policy of the government.

According to data by PTA, 55 percent of the mobile devices in the country are smart phones while the remaining 45 percent are on 2G Pakistan network.

[Riaz Haq]

Business Recorder
@brecordernews
Indus Motor Company, the assembler of Toyota-brand vehicles in Pakistan, said on Tuesday that it has become the first company in the four-wheeler segment to start exports after it signed an agreement with Toyota Egypt.

https://www.brecorder.com/news/40252013/pakistans-indus-motor-compa...

Agreement signed, Ali Asghar Jamali says 'too early' to deem it turning point for struggling auto sector


“We have already sent our first shipment this month,” Chief Executive Ali Asghar Jamali told Business Recorder.

A press release issued by the company also stated that the first consignment of semi-processed raw material to be shipped to Toyota Egypt will mark the “beginning of era from the export point of view by any original equipment manufacturer (OEM) in Pakistan and plans are in place to continue in this direction”.

Jamali said that while significant, it is “too early” to deem it a turning point for the struggling industry.

His remarks come as Pakistan’s auto sector, highly dependent on imports to meet its assembling needs, remains under pressure due to constraints on issuance of Letters of Credit (LCs). The hindrance comes on the back of Pakistan’s low foreign exchange reserves that triggered import restrictions.

While the State Bank of Pakistan (SBP) has lifted restrictions, it will take some time before normalcy returns.

At the same time, a fast-depreciating rupee pushed up prices of automobiles while runaway inflation also took Pakistan’s key interest rate to a record high, discouraging buyers from financing. In response, almost all auto sector’s players have been announcing plant shutdowns with regular monotony.

“This is a baby step at the moment,” said Jamali. “Currently, we have raw material constraints in the country. It would stop us from exporting huge quantities. But I am hopeful.”

The CEO said the company will only be exporting a certain part to Egypt.

“If their confidence is built, we may be asked to export more parts.

“Even if we manage to export one part to many markets, it would increase our export numbers.

“We hope that other manufacturers would also get confidence and find avenues to export as well,” he added.

A statement from the company, meanwhile, said the partnership with Toyota Egypt “is the first step to meet requirements set under the Auto Industry Development and Export Policy (AIDEP) 2021-2026”.

[Riaz Haq]

Revenue in Pakistan Laptops market amounts to US$0.88bn in 2023. The market is expected to grow annually by 5.52% (CAGR 2023-2028).
In global comparison, most revenue is generated in China (US$23,250.00m in 2023).
In relation to total population figures, per person revenues of US$3.75 are generated in 2023.
In the Laptops market, volume is expected to amount to 1.54m pieces by 2028. The Laptops market is expected to show a volume growth of 2.5% in 2024.
The average volume per person in the Laptops market is expected to amount to 0.01pieces in 2023.

https://www.statista.com/outlook/cmo/consumer-electronics/computing...

[Riaz Haq]

Yousuf M.Farooq
@YousufMFarooq
Localization

Full speed ahead

LED Lights Made in Pakistan !

The industry started with just assembling SKD kits imported from China.

Now the PCB, MCPCB, the constant current power supply, plastic parts, metal parts, wires and packaging are now all being Made in Pakistan.


https://twitter.com/YousufMFarooq/status/1694184000137375825?s=20

[Riaz Haq]

Technology
Xiaomi’s Local Partner to Start Selling TVs in Pakistan
Air Link aims to start assembling televisions in January
Mobile assembler also plans to ramp up mobile phone output


https://www.bloomberg.com/news/articles/2023-08-15/xiaomi-s-local-p...


By Faseeh Mangi
August 15, 2023 at 1:40 AM PDT
Pakistan’s Air Link Communication Ltd. plans to start assembling Xiaomi Corp. televisions in January to sell in the world’s fifth-largest nation.

The companies, which forged a partnership two years ago to sell mobile phones in Pakistan, don’t expect major investment will be needed since the assembly lines for both products are quite similar, Air Link CEO Muzzaffar Hayat Piracha said in an interview.

-----------------

https://propakistani.pk/2023/08/15/air-link-communication-to-start-...

Piracha said that Air Link has become profitable in the past six months. The company aims to raise mobile phone production to around 500,000 per month by the end of the year, up from 300,000 currently, he added.

Air Link, which began operations as a mobile phone reseller just over 10 years ago, became Pakistan’s largest private sector public offering when it was listed at PSX in 2021. It has since become one of the country’s largest smartphone distributors.

Pakistan has recently seen a slight uptick in the revival of business operations by foreign enterprises ever since the International Monetary Fund agreed to a new bailout program to revive the economy. The IMF demanded that the country remove all import restrictions, which has appealed to distributors like Air Link.

[Riaz Haq]

Over the past few years, Pakistan’s electronic industry has continued to grow at a rapid pace. State Bank of Pakistan (SBP) reported an amazing 7.8 percent growth during the first quarter (Q1) of the fiscal year 2018-19.

The Quarterly Report for FY19 states that the consistency in the growth of the electronic market has not only attracted the interest of local investors but also the foreign investors. For example, the third largest television set producer in the world, TCL, has announced its plans to extend its operations in the Pakistani electronic market.

“Improvement in electricity supplies alongside an extended summer season drove the demand for the electronic goods. The consistent growth of the segment has attracted the attention of the foreign investors as well,” stated the report.

The report also highlights the factor that played a substantial role in electronic growth. The report suggests that the production of electronic appliances such as smartphones, different types of cooling equipment, electric motors, TVs, watches, and electronic security systems have found a considerable rise over the past few years.

However, the report presents an overall challenging macroeconomic environment during the first quarter of FY19. The report also shows a 4.0 to 4.5 percent growth in real gross domestic product, which is less than its October forecast of 4.7-5.2 percent growth.

“The primary concern was the steep rise in global crude prices, which not only reinforced the already strong underlying inflationary pressures in the economy but also eclipsed emerging improvements in the external sector,” it stated.