Dixon advances joint venture talks with several electronics component firms

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Dixon advances joint venture talks with several electronics component firms

Dixon advances joint venture talks with several electronics component firms

Industry News
Aug 12,24

The initiative aligns with the government’s efforts to incentivise domestic manufacturing across 12-15 component categories to enhance local value addition.

Dixon advances joint venture talks with several electronics component firms

Dixon Technologies is progressing with discussions to establish joint ventures with multinational electronics component companies, aiming to strengthen its position in the burgeoning component manufacturing sector. Atul Lall, Managing Director, Dixon, revealed that the company plans to begin smartphone production for two new global brands in the coming months.

The initiative aligns with the government’s efforts to incentivise domestic manufacturing across 12-15 component categories to enhance local value addition.

“We are focusing on non-semiconductor components for smartphones. We have successfully developed a relationship with HKC for display modules, and this partnership is set to enter the execution phase. We expect production to start within 10 to 12 months,” Lall stated. He emphasised that Dixon is in “deep dialogues” with potential partners to forge financial joint ventures for additional modules.

The company’s focus will also include precision components and die cuts. “We are in advanced discussions with a potential partner for these components,” he added.

Dixon recently received clearance from the Competition Commission of India to acquire a 50.10% majority stake in Ismartu India, a subsidiary of Chinese handset maker Transsion Technology. The Ismartu acquisition will add significant capacity to Dixon's operations, with the factories capable of producing 10-12 million 4G/5G smartphones annually. This addition will boost Dixon’s overall capacity and revenue, which is expected to consolidate into Dixon's financials.

Currently, Dixon operates four plants, including one for Samsung, with a combined production capacity of 35-36 million units. With the addition of Ismartu, capacity could rise to 50 million units, depending on the product mix.

In the coming months, Dixon will expand its portfolio by adding two new global brands, one of which is linked to Ismartu. The company already manufactures phones for brands including Motorola, Samsung, HMD, Realme, Xiaomi, and Transsion-Ismartu.

Dixon is also establishing a new campus in Chennai to produce laptops for four leading notebook brands, with operations expected to start within 8-10 months. The company currently produces notebooks for Acer and is initiating the new product introduction process for Lenovo laptops, with full-scale production planned for the third quarter of FY25.

Lall explained that Dixon’s IT hardware strategy mirrors its approach in smartphones, starting with an anchor customer and expanding to leverage operating scale. Unlike mobile handsets, IT hardware lacks duty incentives, relying instead on the Production Linked Incentive (PLI) scheme, which necessitates significant value addition.

Regarding the Ministry of Electronics and Information Technology’s upcoming scheme for electronics components, Lall noted that the industry has submitted a proposal focusing on non-semiconductor components. While the government seems to favor a PLI route, Lall remains optimistic and anticipates further developments.

“Let’s see how the scheme unfolds. We’ll need to remain patient and hopeful,” he concluded.

(Moneycontrol)