How Mobile Device Manufacturing Is Boosting Growth in Egypt’s Electronics Sector

Egypt’s manufacturing sector is not known for its high degree of specialization in electronics, and like many others, the country has traditionally relied heavily on imports for its technology.

In a recent interview with PYMNTS, Dr. Tamer El-Hussainy, CEO of Egyptian payments company Damen, highlighted how ongoing supply chain issues were affecting the sourcing of certain essential hardware components from China, negatively impacting Damen’s ability to meet demand for its point of sale system.

Related: PayTabs Egypt, Waffarha Partner on Digital Payments for Online Shopping

But while the country’s advanced electrical manufacturing industry is small, the good news is that it is beginning to show a lot of promise.

In the nation’s industrial centers, homegrown companies like SICO Technology have forged a path for the manufacturing of local electronics, boosting Egypt’s potential to be a regional high-tech manufacturing powerhouse.

At the same time, since 2015, a government initiative known as “Egypt Makes Electronics” (EME) has been launched to help build the nascent sector, attract foreign investment and encourage international manufacturers to set up shop in the country.

In a landmark victory for the EME initiative, Vivo, the largest telecommunications company in Brazil, opened its first smartphone production facility in Egypt last month. On an inaugural tour of the new factory, Egypt’s Minister of Communications, Amr Talaat, said that the partnership with Vivo has already attracted investments of $20 million to the country and is expected to create 1,500 new job opportunities within a year.

In addition to the new Vivo factory, it was revealed this month that Finnish mobile phone manufacturer HMD Global had signed a deal that will see the company manufacture various models of its Nokia mobile devices in Egypt, with production expected to begin by the end of the year.

Both the new Vivo facility and the recently-announced Nokia deal are a significant boost to the local manufacturing ecosystem that will not only help to enhance Egypt’s expertise in the field, but ensure the local workforce is equipped with the right skills, education, and technology needed to drive the sector’s growth.

Global Manufacturing for Global Businesses

With the arrival of two of the world’s largest mobile phone manufacturers, Egypt is suddenly emerging as a regional leader in the field and making the country an attractive destination for similar companies looking to establish manufacturing hubs in the region.

What’s more, with new production capacity in Egypt, the Chinese and Finnish technology businesses can enhance their ability to cater to high-growth markets in both the Middle East and North Africa (MENA) and the sub-Saharan Africa regions.

This rise of a strong smartphone industry in Egypt has far-reaching advantages that can help minimize the challenges companies like Damen have had in sourcing electrical components, insulating them from external supply chain issues in the future.

In fact, considering the worldwide shortage of silicon semiconductors that has had knock-on effects in the supply of everything from gaming consoles to cars, multinational businesses appear to be questioning the manufacturing model that overly concentrates capacity in a small number of locations.

Read more: Chip Shortage Forces Toyota to Scale Back Production

One of the world’s largest manufacturers of silicon chips, the Taiwan Semiconductor Manufacturing Company, last year announced plans to open a new plant in Japan, and is reportedly in discussions with the government of Singapore to open a facility there.

More on this: Semiconductor Manufacturer to Build New Japanese Chip Factory

Meanwhile, Samsung announced last year that it will build a new $17 billion semiconductor factory in Texas, its biggest U.S. investment to date.

As Egypt’s manufacturing sector matures, smartphones are not the only growth opportunity the country will be able to cash in on. As international commerce seeks a more distributed, resilient model for manufacturing, the North African nation may well continue to attract multinational companies looking to establish more global production and export facilities in the country.

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