The next made-in-India story is R&D, not assembly, says Carl Pei as Nothing’s CMF eyes 100 million phones a year

India has built much of the manufacturing infrastructure needed to become a global electronics hub. What it has not yet produced, according to Nothing co-founder Carl Pei, is a consumer electronics brand with the engineering capabilities and global scale to anchor that ecosystem.

That is the gap Pei says Nothing wants to address through CMF, which the company plans to spin out as a standalone Indian company, majority owned by Indian shareholders and headquartered in India, with its own local team and R&D operations.

“CMF becomes Indian,” Pei said in a letter outlining the rationale behind the move. Nothing will remain a shareholder and partner in the new company, while the engineering capabilities, operating system, supplier relationships and global brand infrastructure built by Nothing will form part of the spin-out.

The move marks a shift in the way Nothing sees its India opportunity. Rather than treating the country primarily as a manufacturing base or a large consumer market, Pei wants CMF to become a vehicle for building products and engineering capabilities in India, with the eventual ambition of reaching 100 million phones a year.

“100 million a year is the line between a brand and a platform,” Pei wrote. At that scale, he argues, suppliers can begin building specifically to a brand’s requirements, while investments in operating systems, cameras and AI can be spread across a much larger device base.

From manufacturing hub to R&D hub

Pei’s argument is rooted in the transformation of India’s smartphone manufacturing landscape over the past decade. He points out that 99% of smartphones sold in India are now made in the country, compared with almost none a decade ago, calling the shift a “massive industrial achievement”.

But he believes manufacturing is only the first stage.

India has a domestic market that absorbs more than 150 million smartphones a year and a government focused on making the country a global export hub. Yet, Pei argues, much of the underlying intellectual property behind the products manufactured locally remains offshore because Indian brands have not historically created enough demand for suppliers to develop new technologies locally.

That is where he sees R&D playing a critical role.

“Real R&D” goes beyond assembling or selecting components, Pei wrote. It includes engineering a phone’s structure, materials, thermals and durability; selecting camera sensors and developing the imaging pipeline; writing and maintaining the operating system; tuning and certifying antennas; and working directly with suppliers to co-engineer displays, chipsets and camera modules.

The distinction matters because Pei believes brands that rely primarily on manufacturing partners eventually face a ceiling. Such companies can largely differentiate through price and specifications available off the shelf, whereas companies with their own engineering teams can develop new products and work with suppliers to create capabilities that did not previously exist.

Look at China as an example. When Pei moved from Stockholm to Shenzhen in 2012, he says the best displays came from Korea and the best camera modules from Japan, while Chinese suppliers were largely focused on cheaper components. By the time he left China in 2020, Chinese suppliers had become major global players across components including OLED panels, camera modules and in-display fingerprint sensors.

In his view, that ecosystem did not emerge from policy alone. Chinese phone makers repeatedly pushed suppliers to solve difficult engineering problems, which eventually created capabilities that were then supplied to the broader global industry.

CMF as Nothing’s India vehicle

Pei believes India now has the ingredients for a similar cycle, but needs brands capable of creating that engineering demand.

Nothing already has a base to build from. The company says its Nothing OS is a full in-house Android build, with its own camera processing and features, and has been updated on schedule for every device since 2021. Pei also points to the company’s industrial design capabilities, multiple Red Dot and iF awards, and direct relationships with suppliers for displays, chipsets and camera modules.

CMF, which was created from that foundation, was also described by Pei as India’s fastest-growing smartphone sub-brand in 2025.

The proposed structure is therefore intended to go beyond simply shifting more production to India. CMF will be incorporated in India, controlled in India and majority owned by Indian shareholders, while Nothing retains a stake and remains a partner. The company’s engineering DNA, OS capabilities, supplier relationships and global brand engine will come with the business.

For Pei, the larger opportunity is demographic as much as industrial. He says several hundred million Indians under the age of 30 are increasingly influencing what the next generation of smartphones should look like.

A different kind of India bet

The proposal also comes against the backdrop of the decline of Indian smartphone brands over the past decade. In 2015, Indian brands accounted for close to half of smartphone sales in the country and one domestic brand had briefly overtaken Samsung as the best-selling brand.

However, he argues that these companies struggled to develop the engineering capabilities needed to sustain that lead. Foreign brands subsequently entered with stronger camera systems, design, integration and annual product improvements. By 2025, Pei says Indian brands accounted for less than 1% of the market they had once led.

That history shapes his argument for CMF. The opportunity, he says, is not simply to create another Indian smartphone brand, but to build one with enough R&D depth to keep improving after the initial market opportunity passes.

“India will produce global consumer electronics companies,” Pei wrote. “The only question is when, and that depends on who builds them.”

For Nothing, the bet is that CMF can be that platform, while India provides the market, talent and manufacturing base needed to scale it. The stated end goal is ambitious: move from selling products in India to building products in India, and eventually create a business large enough to influence the supply chain around it.