OnePlus co-founder Carl Pei's new startup wants to launch smartphone in the U.S. to take on Apple - CNBC

U.K.-based user tech institution Nothing is mounting its sights connected the U.S., with ambitions of taking connected Apple's iPhone.

The startup, the hardware task of Carl Pei — co-founder of Chinese mobile telephone shaper OnePlus — is successful aboriginal conversations with American carriers astir launching a caller smartphone successful the U.S., Pei told CNBC, without naming immoderate of the carriers.

In July, Nothing launched Phone (1), a mid-range instrumentality with a design, terms and specs akin to Apple's entry-level iPhone SE.

The company, which is backed by iPod creator Tony Fadell and Alphabet's VC limb GV, has lone launched its smartphone successful Europe, the Middle East and Asia truthful acold — not the U.S. oregon Canada.

"The crushed wherefore we didn't motorboat successful the U.S. is due to the fact that you request a batch of further method support, to enactment each the carriers and their unsocial customizations that they request to marque connected apical of Android," Pei explained successful an interrogation with CNBC. "We felt that we weren't acceptable before."

"Now we are successful discussions with immoderate carriers successful the U.S. to perchance motorboat a aboriginal merchandise there," said the Chinese-Swedish entrepreneur.

The likes of Apple and Samsung already person established relationships with ample U.S. carriers, making it harder for smaller firms to compete.

But a 3rd of the income of its precocious launched Ear (stick) headphones presently travel from the U.S., Pei added.

"It's decidedly a marketplace wherever there's already a batch of involvement for our products. And if we motorboat our smartphones there, I'm definite we could get important growth," helium said.

The institution expects its revenues to leap much than tenfold successful 2022 — from astir $20 cardinal successful 2021 to an estimated $250 cardinal this year, according to figures shared with CNBC exclusively. It has besides much than doubled its employees to much than 400. However, the steadfast is inactive losing money.

"The extremity is to beryllium profitable successful 2024," Pei said. "We are not profitable close now. And this twelvemonth was made adjacent harder owed to the overseas currency exchange. We wage a batch of our COGS [cost of goods sold] successful USD but we marque wealth successful pounds, successful euros, successful Indian rupees — truthful everything devalued against the USD."

The U.S. dollar has rallied this year; the dollar index — which measures the greenback against a handbasket of large currencies — is up implicit 8.5% year-to-date.

Pei wants to situation Apple's iPhone successful the U.S. But it's a steep elevation to climb.

"There's a situation with Android wherever iOS is conscionable becoming much and much dominant. They person precise beardown lock-in with iMessage, with AirDrop, particularly among Gen Z. So that's a rising interest for me," helium said.

"There mightiness beryllium a clip wherever Apple is similar 80% of the wide marketplace and that conscionable does not permission capable abstraction for Android-based manufacturers to support playing," helium said.

Apple was not instantly disposable for remark erstwhile contacted by CNBC.

Pei says helium sympathized with Elon Musk, who arsenic Twitter's caller CEO has enactment unit connected Apple implicit its App Store restrictions and 30% interest imposed connected in-app purchases.

He added that, successful a mates of years' time, Nothing whitethorn person to "have a superior deliberation astir this occupation and however we tackle it."

"It's going to make a ceiling to our growth," Pei said.

Pei said his steadfast has faced a plethora of challenges successful bringing its products to market. One of the large setbacks it faced was erstwhile it approached Foxconn, Apple's largest iPhone supplier, to manufacture its phones.

According to Pei, Foxconn refused to bash concern with Nothing, citing past failures successful the smartphone industry.

"Every startup shaper has worked with Foxconn," Pei said. "But erstwhile it was our turn, they said nary due to the fact that each startup that worked with them failed. And each clip a startup failed, Foxconn mislaid wealth connected it, they were not capable to recoup their costs."

Foxconn was not instantly disposable for remark erstwhile contacted by CNBC.

Covid restrictions astir the globe besides presented a important hurdle for the company. In India, wherever Nothing produces its phones, the institution was incapable to alert retired engineers owed to question restrictions, with Pei saying the institution had to negociate its mill connected the crushed remotely.

"We truly had to hustle to make this," helium said of Nothing's smartphone.

In Shenzhen, China, wherever officials person imposed strict lockdowns, Nothing's engineers had to sermon constituent designs and mechanics during mandated 45-minute periods erstwhile it was acceptable for radical to spell extracurricular to bargain groceries.

Nothing has sold implicit 1 cardinal products to day globally, with its Ear (1) earbuds selling 600,000 units and the Phone (1) reaching 500,000 shipments.

Still, the startup is simply a tiny player, and it faces a bleak economical outlook wherever radical are being forced to bounds their spending drastically.

In Europe, smartphone shipments sank 16% successful the 3rd 4th year-over-year, though they were up somewhat from the erstwhile 4th connected the backmost of the iPhone 14's beardown launch.

Samsung is Europe's largest smartphone shaper with 35% marketplace share, followed by China's Xiaomi's 23% and Apple's 21%.