India has already become a major hub for smartphone manufacturing, but Nothing CEO Carl Pei believes the country’s next big opportunity is not just assembling devices. It is building the research, engineering and product development capabilities needed to create global consumer electronics brands.
In a detailed letter titled India Is Inevitable, Pei argues that manufacturing is only the first step. The next phase, according to him, will depend on companies building strong R&D teams in India that can design products, develop software, work directly with component suppliers and improve devices year after year.
The letter also explains why CMF, currently associated with Nothing, is being spun out into a standalone company based in India.
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CMF to Become a Standalone Indian Company
One of the biggest announcements in Carl Pei’s letter is the future structure of CMF.
Pei says CMF will be separated from Nothing and turned into a standalone Indian company. The company will be headquartered in India, have its own team and R&D operations in the country, and will be majority owned by Indian shareholders.
Nothing will continue as a shareholder and strategic partner.
Pei describes the idea simply: CMF becomes Indian, while Nothing brings its engineering experience, operating system, supplier relationships and global brand knowledge to the partnership.
Later in the letter, he adds that CMF will be incorporated and controlled in India, while Nothing will retain a stake in the business.
Why Carl Pei Thinks India Needs More R&D
India has made major progress in electronics manufacturing over the past decade.
According to Pei’s letter, around 99% of phones sold in India are now made in India, compared with almost none around ten years ago. He describes this as a major industrial achievement, but believes manufacturing alone will not create the next generation of global technology companies.
The next step, he argues, is R&D Research and Development.
This means companies should not simply select an existing phone design from a manufacturer and sell it under their own branding. Instead, they need engineers who can control important parts of the product.
What Does “Real R&D” Mean According to Carl Pei?
Pei outlines five areas that he believes show whether a smartphone company actually controls its own product development.
These include:
- Engineering the structure, materials, thermals and durability
- Selecting camera sensors and developing the imaging pipeline
- Developing and maintaining the operating system
- Tuning and certifying antennas when hardware designs change
- Working directly with suppliers on displays, chipsets and camera modules
If most of these decisions are handled entirely by the manufacturing partner, Pei argues that the company is essentially selecting an existing product rather than engineering a new one.
That difference becomes important when several brands are competing using similar components and designs.
A company with its own engineering team has more freedom to create different products, optimise costs and improve the hardware and software with every generation.
Carl Pei Points to What Happened With Indian Smartphone Brands
Pei also looks back at the Indian smartphone market around 2015.
According to his letter, Indian brands together sold close to half of the smartphones in the country at the time, and one domestic brand briefly became India’s top-selling smartphone company.
However, he argues that many domestic brands relied heavily on ready-made designs while foreign smartphone manufacturers invested more deeply in engineering, camera development, software integration and industrial design.
Pei says that by 2025, domestic smartphone brands accounted for less than 1% of a market they had once played a major role in.
His point is that manufacturing and branding may help a company grow initially, but long-term survival depends heavily on the ability to keep improving the product.
Why China Is an Important Example
Pei also uses his experience in China to explain how a strong electronics ecosystem develops.
He moved from Stockholm to Shenzhen in 2012. At the time, he says some of the best smartphone displays and camera components came from companies outside China.
Over the following years, Chinese smartphone brands began working more closely with suppliers and demanding new components such as thinner modules, brighter displays and more durable folding mechanisms.
Those demands forced suppliers to develop new technologies and eventually helped create a much stronger local component ecosystem.
Pei believes India could follow a similar path if companies operating in the country start building strong engineering teams and asking suppliers to develop products rather than simply purchasing existing components.
India Already Has the Manufacturing Base
According to Pei, India already has several important pieces required to build a major consumer electronics ecosystem.
The country has a large smartphone manufacturing base and, according to the letter, a market that absorbs more than 150 million smartphones every year.
What Pei believes is still missing is a consumer electronics brand capable of creating enough engineering demand to push suppliers towards deeper localisation and product development.
In other words, the next stage is not only Made in India, but increasingly Designed and Engineered in India.
Nothing Says It Already Has the Engineering Foundation
Pei argues that Nothing already has many of the capabilities needed to help build this ecosystem.
The company develops Nothing OS internally, works on its own camera processing and product features, handles industrial design and works directly with suppliers on displays, chipsets and camera modules.
The letter also says Nothing has sold millions of products globally, including in India.
CMF was created using this same foundation, and Pei says it became India’s fastest-growing smartphone sub-brand in 2025.
The plan is now to bring more of those capabilities into India as CMF develops into a separate company.
Carl Pei Has a Much Bigger Target for CMF
Pei’s ambitions go beyond simply creating another smartphone brand.
He discusses a long-term path towards producing 100 million phones per year.
At that level, he argues, a company becomes important enough that suppliers start designing components specifically for its requirements.
Large investments in areas such as camera processing, software, AI and operating systems also become easier to justify when those costs are spread across tens of millions of devices.
That is clearly a long-term ambition rather than an immediate sales target, but it shows the scale Pei believes could eventually be possible from India.
From Made in India to Engineered in India
Carl Pei’s letter makes one message very clear: India’s electronics story cannot stop at manufacturing.
The country has already built large-scale smartphone production capabilities. The next challenge is creating companies that control the product itself from hardware design and cameras to software, engineering and supplier development.
The decision to turn CMF into a majority Indian-owned standalone company is Nothing’s attempt to position the brand around that opportunity.
If the strategy works as Pei describes it, CMF will not simply be another smartphone brand selling products in India. The bigger ambition is to build an electronics company that is owned, operated and engineered in India, while using Nothing’s existing technology and global supplier network as a foundation.