Leading electronics manufacturer Dixon Technologies, through its subsidiary Padget Electronics' pact with Taiwan's Compal Electronics, will start making Google Pixel smartphones in September of this year.
"Manufacturing for another global brand through Compal is expected by September 2024," the company’s Managing Director, Atul Lall, said in the earnings call on July 30. "We are expecting to add one more large global brand in the coming month."
Lall did not mention Google's name, but a source confirmed that the Compal partnership is for manufacturing Google Pixel smartphones. Google has not yet officially announced its manufacturing partnerships in the country, even though it announced its plans to manufacture smartphones locally in 2023.
Moneycontrol reported on July 6 that Google was looking to establish India as a key export hub for its Pixel smartphone range for markets in Europe and the United States and that it would soon start commercial production through Foxconn and Dixon subsidiary Padget Electronics.
Google has already launched trial production in Tamil Nadu with Foxconn, also a major maker of Apple devices. The base variant would be made by home-grown Dixon Technologies, while Foxconn would be responsible for Pro variants, the source said.
Lall said Dixon Tech earlier this month secured the Competition Commission of India's clearance to acquire a majority 50.10 per cent share in Ismartu India - a subsidiary of Chinese handset maker Transsion Technology -
"On the Ismartu deal, we received approval from the Competition Commission of India this month, and we will start consolidating those financials in next seven to ten days...we have got a large scale through the deal," he said during the Q1 earnings call.
Dixon has created a capacity of 45 million smartphones and will add another 10-12 million after the Ismartu acquisition, which is around 55-60% of the opportunity pool in this business.
Smartphone Manufacturing
Dixon said it is also seeing strong volume growth for Motorola's smartphones, with monthly order books of almost 9-10 lakhs, including export orders.
Dixon's Lall told analysts during the earnings call that the Xiaomi business too has ramped up and has been clocking 7 lakh monthly units since July. "We expect higher volumes in the coming months of the festive season."
"We'll have the largest capacity in the country. We'll have all the brands that are the largest in the country in the Android ecosystem, and the focus then is to deepen the valuation...we now have the financial bandwidth and also get in the process of acquiring technical bandwidth on our own, and also through partnership group," Lall added.
For the quarter ended June 30, Dixon booked almost Rs 40 crore as PLI incentives for mobile business.
Expansion Plans
Under the next expansion phase, Dixon wants to deepen manufacturing by focusing on the component manufacturing ecosystem. It recently announced a joint venture with HKC Corporation for local manufacturing of display module and which it expects will start rolling out next fiscal.
"The project plans are being laid out. The talent exhibition is happening. Site hunting is still happening because it's a complex site plan. But we are still trying our best to start rolling out the production sometime at the end of this fiscal year or Q1 of the next fiscal year. In Phase one, it's going to be 2 million units a month. We have sounded our customers, and they're open to it," Lall said.
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Dixon is also in advanced discussions through the partnership route to explore the non-semiconductor side of mobile components.
"...that's also going to encompass the IT products. So, here we are exploring various components. We're at the advanced stages of discussions with our collaborating partners, who are large globally. This is on the mechanical components, including precision components, PCBs, connectors, cables, and various modules... the balance sheet is strong. And now we have the financial bandwidth to explore these products," Lall said.
Growth Drivers
He added that Dixon is well-poised to capture upcoming opportunities and contribute to India's long-term growth story. "We continue to invest in our capacities and diversify into new categories to support long-term growth opportunities."
Dixon's Chennai campus will become operational in the next 8-10 months and act as a 'significant engine' of growth, focusing on IT hardware categories such as laptops. The total addressable market in the IT Hardware space is Rs 80,000 crore.
"For laptops and IT hardware products, we have already finalized contracts with Lenovo and Acer. We are already manufacturing for Acer and have started the NPI process for Lenovo's notebooks. The mass production for Lenovo will commence in Q3 of this fiscal year," Lall said.
The company has also roped in two new global customers for laptop manufacturing. "They are in the process of signing the declarative agreements. The target is to start production for these two global brands in Q1 next fiscal year. With these four customers, we have the top four customers or the top five global brands operating in the country. For this, a new campus is being planned in Chennai," Lall said.
Dixon aims to replicate its success in IT hardware products after its success in mobile manufacturing.
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