“We reckon if RIL prices the JioPhone Next smartphone at around ₹4,000 and looks to sell 75 million units, the subsidy element per handset could rise to around ₹2,500, or ₹18,750 crore overall,” an analyst at a leading brokerage told ET on condition of anonymity. “This is due to a near 20% rise in component prices, particularly memory and LTE (4G) chipset costs, coupled with procurement delays and continuing global semiconductor shortage.”
In June,
had estimated that RIL might need to subsidise consumers to the extent of ₹15,000 crore if it targets selling around 75 million units, at ₹2,000 subsidy apiece. Jio did not respond to ET’s queries till press time.
RIL’s digital business unit, Jio Platforms, recently deferred the launch of JioPhone Next, developed with Google, to around Diwali – from September 10 – due to the worldwide semiconductor shortage. Analysts said a key challenge for the company is how it manages the component supply chain.
Another analyst, who also did not wish to be named, said that “Jio could also explore a ‘buy now, pay later’ scheme to galvanise JioPhone Next sales, where the upfront sum could be kept low to attract value hunters with an option to pay the balance in easy, multiple instalments”.
If the chipset shortage persists for more quarters, RIL could initially do a token JioPhone Next launch in some markets around Diwali and come up with a full-blown launch once component prices stabilise and semiconductor supplies normalise, said the second analyst.
Brokerage UBS had said in June that even if Google and Jio develop a lighter operating system, the cost reduction would be possible only in few areas such as display (around $5) and memory (around $4), which would make a $50 bill of materials (BOM), or cost of the device, tough to achieve.
Jio is known to be targeting a 500 million user base – from about 425 million now – as it expects the JioPhone Next 4G smartphone to make India “2G-mukt (free)” by targeting a chunk of Bharti
and ‘s 300 million 2G feature phone user base. The company has not disclosed JioPhone Next’s likely pricing.
