Reliance Strategic Business Ventures (RSBVL), a wholly owned subsidiary of Reliance Industries (RIL), will invest Rs 167 crore to form an electronics manufacturing joint venture with Sanmina Corp in the United States to produce 4G and 5G telecom network equipment mainly for local and overseas markets, the Times of India reported. The move will allow the joint venture to compete directly with traditional telecom equipment manufacturers such as Ericsson, Nokia and Huawei.
RSBVL will hold a 50.1 percent stake in the joint venture, while Sanmina will hold the remaining 49.9 percent. RSBVL will buy a new stake in Sanmina's existing Manufacturing in India entity, Sanmina SCI India (SIPL), which will also produce equipment such as data centers and cloud infrastructure.
Sanmina will contribute to its existing contract manufacturing operations. The two companies said in a statement On Thursday that as a result of the investment, the Reliance-Sanmina JV entity will receive more than $200 million in cash to fund growth. The two companies said the transaction is expected to close in September 2022, subject to customary closing conditions, including regulatory approvals.
Reliance Jio director Akash Ambani said the joint venture will tap into significant market opportunities in the country's high-tech manufacturing sector.
"For growth and security, as we chart the way in the new digital economy, India must be more self-reliant in electronics manufacturing in telecommunications, IT, data centers, cloud, 5G, new energy and other industries." Akash Ambani said.
Sanmina Chairman Jure Sola said the joint venture serves both domestic and export markets.
Last October, SIPL qualified for SOPs under the Indian government's Production Hook Incentive (PLI) scheme to promote the manufacture of local telecommunications network equipment. The government recently set a target of $300 billion in the country's electronics manufacturing industry by 2026, compared to $67.3 billion in 2020-2021. To encourage the industry to achieve this, the government has launched multiple PLI schemes.
About two years ago, RIL Chairman Mukesh Ambani said that Jio had developed its own 5G technology and would soon be put into field deployment. He later added that after testing and expansion in the Indian market, Reliance plans to provide its self-developed 5G technology to global telecom companies.
Tarun Pathak, research director at Counterpoint Research, said: "The joint venture will boost Reliance Jio's 5G network equipment manufacturing ambitions and help it compete more fiercely with global suppliers such as Ericsson, Nokia and Huawei. ”
(Yu Yu)