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 payment company Damen, highlighted how persistent supply chain issues were affecting the supply of some critical hardware components in China, negatively affecting the Damen’s ability to meet demand from its point of sale system.
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But although the country’s advanced electrical manufacturing industry is small, the good news is that it is starting to show great promise.
In the country’s industrial hubs, local companies such as SICO Technology have paved the way for local electronics manufacturing, bolstering Egypt’s potential as 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 historic victory for the EME initiative, Vivo, the largest telecommunications company in Brazil, opened its first smartphone production plant in Egypt last month. During an inaugural tour of the new factory, Egyptian Communications Minister Amr Talaat said the partnership with Vivo has already attracted $20 million in investment 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 maker HMD Global has signed a deal that will see the company manufacture various models of its Nokia mobile devices in Egypt, with production to start from here the end of the year.
The new Vivo facility and the recently announced Nokia deal are a significant boost for the local manufacturing ecosystem that will not only help improve Egypt’s expertise in the field, but also ensure that the workforce The local work is equipped with the right skills, education and technology. necessary to stimulate the growth of the sector.
Global manufacturing for global companies
With the arrival of two of the largest mobile phone manufacturers in the world, 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.
Additionally, with new production capacity in Egypt, Chinese and Finnish technology companies can strengthen their ability to cater to high-growth markets in the Middle East and North Africa (MENA) and sub-Saharan African regions. .
This rise of a strong smartphone industry in Egypt has significant benefits that can help minimize the challenges companies like Damen have faced sourcing electrical components, insulating them from external supply chain issues. in the future.
In fact, given the global shortage of silicon semiconductors that has impacted the supply of everything from game consoles to cars, multinational companies seem to be challenging the manufacturing model that concentrates too much capacity in a small number of locations.
Read more: Chip shortage forces Toyota to cut production
One of the world’s largest silicon chip makers, the Taiwan Semiconductor Manufacturing Company, last year announced plans to open a new factory in Japan and is said to be in talks with the Singapore government to open a plant there.
More on this: Semiconductor maker to build new Japanese chip factory
Meanwhile, Samsung announced last year that it would build a new $17 billion semiconductor factory in Texas, its biggest U.S. investment to date.
As Egypt’s manufacturing sector matures, smartphones aren’t the only growth opportunity the country can take advantage of. As international trade seeks a more distributed and resilient manufacturing model, the North African nation may well continue to attract multinational companies seeking to establish more global production and export facilities in the country.
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