‘Make in India' success: Chinese smartphone brands bet on India for manufacturing & exports; Indian phonemakers compete for assembly
Chinese brands look to '
Make in India
': Indian contract manufacturers are intensely competing in large-scale smartphone assembly, aiming to secure additional orders from Chinese brands that seek to broaden their manufacturing presence in India amidst shifting global dynamics.
Chinese brands, experiencing growth and starting exports from India, are broadening their supply chain networks to maintain cost advantages rather than depending on a single Indian supplier as the smartphone production-linked incentive (PLI) scheme approaches its end.
Motorola, owned by Lenovo and previously relying exclusively on Dixon Technologies, has begun allocating some production to Dixon's competitor Karbonn, another PLI-eligible manufacturer.
Motorola remains Dixon's primary customer, with projected volumes of 12 million units in FY25, according to an ET report.
Chinese smartphone brands
grow volumes in India
The Indian smartphone sector remains at around 150-160 million units yearly. Industry observers note that increasing competition could restrict local companies' expansion, with Dixon particularly vulnerable to losing production volumes to competitors.
The available market for contract manufacturers stands at 80-90 million units annually, excluding Apple and Samsung's independent supply chains in India.
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This volume is anticipated to be distributed amongst three to four major manufacturers in the future.
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Initially, Dixon was the sole Indian firm claiming PLI benefits, as others struggled to secure clients. However, recent years have seen firms like Karbonn, Micromax, and Lava becoming PLI beneficiaries. These organisations could potentially claim government incentives alongside Dixon upon achieving specified targets.
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Longcheer, Dixon's second-largest client and a Chinese ODM (Original Design Manufacturer), which contributes 7 million units to Dixon's FY25 production, has begun shifting approximately 2% of its volume from Dixon to Karbonn since May, aligning with its Indian expansion strategy.
In a June 24 report, Phillip Capital indicated that Karbonn's handling of Motorola's production volume increased significantly from 5% in January-February to 25% in April-May.
The shift in Motorola's supply chain corresponds with increased sales and exports from India to the US, following the implementation of substantial tariffs on China by the Donald Trump administration.
An industry analyst informed ET that Motorola's monthly operations have grown from Rs 2,400 crore, previously managed entirely by Dixon, to Rs 3,000 crore, with the additional Rs 600 crore being assigned to Karbonn.
Longcheer is also strengthening its Indian operations to safeguard against potential restrictions on Chinese exports.
According to the aforementioned analyst, Longcheer's production in India could swiftly rise to at least 15% of its total volume, as there was no exclusive arrangement with Dixon.
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Dixon's market share faces competition from Bhagwati Products Ltd (Micromax), which has established a joint venture with Chinese ODM Huaqin.
This partnership affects Dixon's potential revenue from its strategic Vivo manufacturing facility in India, according to Phillip Capital's analysis.
"(Dixon's) Management expects the JV to handle two-thirds of Vivo India's mobile phone volumes. Assuming a proportional volume-to-value ratio conversion, the JV would generate a topline of Rs 160bn at optimal utilisation, of which Dixon's share would be Rs 80bn," the report said.
The Bhagwati-Huaqin collaboration has achieved production levels of 1.6 million smartphones monthly, with operations commencing in the second half of 2024.
"Bhagwati is one of the fastest-growing EMS players in India. They are projected to close June at 1.6 million units per month, and are aiming for more market share. This rapid ramp-up has occurred within a year, primarily from Oppo and Vivo under the partnership with Huaqin," an industry executive familiar with the situation was quoted as saying.
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Longcheer produces handsets for Vivo and Realme via Dixon, and Vivo and Oppo through Karbonn. Meanwhile, Huaqin collaborates with Bhagwati for Vivo and Oppo devices, whilst partnering with DBG for Xiaomi production, according to the analyst.
"I foresee the market having space for at least 3-4 players in the coming years, instead of just one as the ecosystem grows. The volumes will be commanded by players which can offer the desired quality of service.
Cost comes secondary," one of the executives said.
Dixon leads in Android device production volumes, whilst Foxconn and Tata Electronics produce iPhones for Apple, which is experiencing rapid growth. Apple's iPhone production reached ₹1.48 lakh crore ($17.5 billion) in 2024, showing a nearly 46% increase.
Apple's supplier network is projected to achieve $30 billion in yearly production in India by year-end.
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