TAIPEI - - Google has asked suppliers to produce more than 7 million of its upcoming Pixel 6 smartphones last year - double its total phone deliveries '', as the U.S. software giant attempts to capture market share from Huawei Technologies and ride a post-pandemic recovery in demand.
Sources told Nikkei Asia that Google is attempting to capitalize on its position as the only U.S. maker of smartphones running Android operating system! The company has also asked suppliers to build over 5 million budget phones unveiled in spring this year by Pixel 5 A, the sources said. Earlier this year, the IDC said that smartphones were shipments totalling 3.7 million.
Sources say this is the most aggressive move by Google to ramp up its smartphone output. It also marks a sharp turnaround from last year, when the company was forced to scale back production due to disruptions from COVID -19 pandemic.
Since earlier this year, Google has been telling suppliers that its position as the only US manufacturer of Android smartphones will help it boost business at home in Europe and Japan, people briefed on the matter said. The company is specifically aiming to get market share from Apple, Samsung and Xiaomi - the top three smartphone makers - who have all won at Huawei's expense.
Samsung smartphones and other devices ran on Google's Android OS before Washington vigorously curtailed the Chinese tech company's access to American technology due to national security concerns. Most leading smartphone makers, including Samsung, Xiaomi and Oppo, use Android as their standard OS.
Google has high hopes for the Pixel 6 as it is the first smartphone powered by its in-house mobile processor Tensor, a key differentiation that will enable the firm to stand out amid the fierce competition.
Prior to the U.S. clampdown, Huawei relied on a similar strategy to take Apple and Samsung, who also design their own mobile chips for their flagship smartphones. Samsung Electronics Tensor is manufactured by Google using its leading 5 nanometer chip production technology, sources said.
The US software and search engines giant has been pushing forward with its hardware ambitions over the past several years. In 2018, it completed a $1.1 billion deal to acquire part of Taiwanese smartphone maker HTC and its 2,000 employees engaged in research and development to boost its handset capability. Google now has a team of more than 4,000 employees in Taiwan, its largest hardware development base outside of the U.S.
Outside of smartphones, Google is working on a new generation of the Google Pixelbook notebook computer that runs On ChromeOS, two people familiar with the matter said. The company is also developing chips to eventually power its Chromebook laptops.
Production of the Pixel 6 will remain in Vietnam after the pandemic disrupted Google's plans to move most of its smartphones production to China, Nikkei Asia reported earlier. The affordable Pixel 5 A is already made in Singapore.
Google's ramped up production goals come as supply chains face mounting challenges from an ongoing global chip and component shortage. Suppliers are also dealing with unexpected electricity suspensions in China.
Pixel phone production has not yet been impacted, although technical issues related to waterproofing technology have weighed on the efficiency of phone assembly, sources familiar with the matter told Nikkei Asia. Most suppliers are also cautious on whether Google's ambitious goal to expand its mobile business will actually materialize as production orders are subject to change depending on market response, they said.
It's likely Google has good business opportunities in European markets such as Japan and the U.S. who are more sensitive to data privacy and care a lot about national security implications associated with electronic devices, Joey Yen, a tech analyst with the research firm IDC, told Nikkei Asia. Google wants to bet big on its hardware because it wants to have more users and lock in direct interaction with them as that could give it better analytics for its future services. Sean Lin, an analyst with Digitimes Research, described Google's move to use its own mobile processor rather than Qualcomm's as a breakthrough and adventure for the company. It means Google is heading down Apple's path of using its own processor together with its own operating system, Lin told Nikkei Asia. It will be an adventure, as there will be a lot of integration work to do. This could be the moment, he said, when Google's smartphone shipments start to take off, after being limited to a few million units in the last few years.
We will see whether Google promotes its hardware products in more sales channels and whether the market reacts positively, Lin said.
Google said it did not have any comment on specific production volumes, but pointed to past statements describing the technical capabilities of the new Tensor Mobile processor.