📱 Mobile phone manufacturing

Good morning and happy Friday. You know the drill - time for some R&R ⛳️ 🛏️ 🥞 

- Ruchirr Sharma & Shatakshi Sharmaa  

TABLE OF CONTENTS

• 📱 Mobile phone manufacturing

• 🏦 Lending outpaces deposit growth

• 🗞️ Bite-sized summaries

  • 💰️ Wall Street faces job cuts

  • 🤖 Google's ambitious AI plans

• 🧑‍🍳 What else is cookin’?

• 🍿 Entertainment, Entertainment, Entertainment

MARKETS

🇮🇳 India

• Stock market closed lower yesterday, with key indices declining. The market experienced weakness due to concerns over corporate earnings, foreign fund outflows, and economic growth projections. Banking, IT, and auto sectors were among the main drags, contributing to the overall downward trend in trading session.

🌍️ International

• The New York Stock Exchange and the Nasdaq were shut down to honour the former president, Jimmy Carter.

MANUFACTURING

📱 Mobile phone manufacturing

India's mobile phone manufacturing sector is grappling with significant under-utilisation of its production capacity. Despite robust growth under the government’s Production-Linked Incentive (PLI) scheme, weak global and domestic demand has left nearly half of the installed capacity idle or repurposed for other products like telecom equipment and wearables.

The country's annual production capacity, estimated at 400–500 million units, is underused, with only 250 million phones produced annually. Smaller players catering to the domestic market are especially affected, while larger manufacturers like Foxconn and Dixon Technologies, which focus on exports, maintain higher utilisation rates above 60%.

The decline in demand for feature phones and entry-level smartphones is a significant contributor. Feature phone shipments dropped 14% year-on-year in 2024, primarily due to a sharp fall in 4G models. Smartphone shipments have remained stagnant since 2022, following a post-pandemic surge.

Despite the current slowdown, experts view the unutilised capacity as a strategic advantage for future growth. Global demand is expected to rebound in 2025, allowing Indian manufacturers to scale production swiftly. Additionally, investments in the sector have surpassed government targets, with PLI-driven players like iPhone suppliers Foxconn and Tata Electronics leading the way.

India’s mobile phone production ecosystem has evolved significantly, with manufacturers investing heavily to meet PLI targets and repurposing facilities to remain viable. While immediate challenges persist, the sector’s expanded capacity positions it well for a potential demand surge in the coming years.

Read more: Economic Times

LENDING

🏦 Lending outpaces deposit growth

In the final fortnight of 2024, lending growth in India surpassed deposit growth, reflecting a year of imbalances between credit and deposits. According to Reserve Bank of India (RBI) data as of December 27, credit expanded by 11.16% year-on-year, compared to a 9.8% rise in deposits. This disparity pushed the credit-to-deposit (CD) ratio to 80%, up from 79% in the same period last year.

Bank deposits reached ₹220.6 lakh crore, while total credit stood at ₹177.43 lakh crore. Despite banks increasing deposit rates since May 2022, deposit growth has remained sluggish. Savers are drawn to alternative high-return investments like stocks and mutual funds, further challenging deposit mobilisation.

Credit growth, driven by retail loans, has slowed due to regulatory measures. The RBI imposed higher risk weights on unsecured lending and credit cards, while loans to non-banking financial companies (NBFCs) also decelerated due to stricter capital requirements. Ratings agencies have revised credit growth projections downward. ICRA estimates FY2025 credit growth at 10.5%-11%, down from earlier forecasts of 11.6%-12.5%.

The banking sector faces additional hurdles, including elevated loan-to-deposit ratios, anticipated provisioning for infrastructure projects, and the implementation of expected credit loss norms. Despite these challenges, analysts maintain a neutral outlook for FY2026, signaling resilience but caution in the sector.

As banks navigate these pressures, raising deposits remains costly and competitive. With deposit growth relying heavily on term deposits, the need for innovation in savings mobilisation becomes crucial. Meanwhile, lending policies are expected to stay stringent, ensuring financial stability amid an evolving economic landscape.

Looking ahead, the sector must balance regulatory compliance, credit demand, and deposit growth to foster sustainable expansion.

Read more: Economic Times

GENERAL OVERVIEW

🗞️ Bite-sized summaries

💰️ Wall Street faces job cuts - Global banks may eliminate up to 200,000 jobs within five years as AI automates roles in back office, middle office, operations, and customer services, according to Bloomberg Intelligence. Nearly 54% of banking jobs are considered highly automatable, with routine tasks most at risk. While AI adoption promises increased productivity and up to $180 billion in profits by 2027, it’s also reshaping roles rather than fully replacing them. Executives emphasize AI's potential to enhance worker efficiency and quality of life. Despite challenges, banks continue leveraging AI to modernize systems and boost revenue in a transforming industry landscape.

🤖 Google's ambitious AI plans - Google CEO Sundar Pichai outlined bold AI strategies for 2025, focusing on new products and features. The company aims to expand its Gemini AI model, with Gemini 2.0 Flash set for general availability in January. Gemini’s integration into Search and other platforms is expected to accelerate. Google is also enhancing personalized services, such as the “Daily Listen” feature in Search Labs. Pichai emphasized the importance of adapting to rapid technological evolution and regulatory challenges, calling 2025 a pivotal year for innovation. Google focuses on addressing user needs and advancing AI leadership amid growing competition and scrutiny.

HEADLINES

🧑‍🍳 What else is cookin’?

What’s happening in India (and around the world 🌍️)

• India added 24.5 GW solar and 3.4 GW wind capacity in 2024, sets new records.

• Why Microsoft layoffs across Satya Nadella-led company won't bring a change in total headcount.

• Tech glitch in data transmission led to inflated gold, silver import data.

• Q3 woes: Cement companies may face earnings downgrades again.

• More than 6,000 homes, structures lost in Palisades, Los Angles due to forest fires.

CULTURE

🍿 Entertainment, Entertainment, Entertainment

• The Roshans, official trailer out now.

• Badminton: HS Prannoy loses in second round of Malaysia Open.