Xiaomi aims to source over 50% smartphone components locally by 2025, no plans for EV launch: India President

Xiaomi EV

China's Xiaomi aims to increase local sourcing of components for its smartphones in India through new partnerships with local component manufacturers. The company, which has completed ten years in India, will now be expanding and deepening the component ecosystem within the country, a top executive said.

Xiaomi has also set an ambitious target to sell 350 million devices over the next ten years.

"As of 2023, 35 percent of the non-semiconductor bill of materials (BoM) for a phone is locally sourced in terms of components. Over the next two years, our strategy is to broaden and deepen the component ecosystem locally. We aim to source 55 percent of the non-semiconductor BoM or components locally," said Muralikrishnan B, president at Xiaomi India.

The Bill of Materials (BoM) in a smartphone refers to a comprehensive list of all the components, parts, and raw materials required to manufacture the device. This includes everything from the smallest electronic components to the casing and packaging materials.

In terms of domestic value addition, the net value addition in Xiaomi smartphones was 18 percent in the financial year (FY) 2023. "...with our focus on deepening and broadening the component ecosystem, we expect to take that number to 22 percent by FY25," he added.

Achieving higher local value addition in electronic product manufacturing is one of the biggest challenges in India due to the absence of electronic components.

Xiaomi's plans align with the Ministry of Electronics and Information Technology's (MeitY) upcoming incentive scheme, set to launch in August-September with an anticipated outlay of Rs 30,000-40,000 crore. This subsidy program for electronics components manufacturing is part of the government's 100-day agenda.

Muralikrishnan said that the company aims to have more manufacturing partners in India with a mix of both domestic and multinational players. The company has outsourced manufacturing of its devices to Dixon Technologies, Foxconn, Optiemus, and BYD in India.

The company is currently engaged with partners to start local manufacturing of its tablets in the country. "Everyone is having these conversations for tablet manufacturing because there is a trigger date in September. When the time is ready, we will be happy to disclose information.

"We have always been focused on making in India, not just for smartphones but also for smart TVs and audio products. We will add more products to the list and get them made locally," he added.

Xiaomi, which entered the Indian market in 2014, has now set an ambitious target to ship 350 million devices over the next ten years.

"We have shipped 250 million smartphones in the last 10 years and a total of 350 million units across all product categories. This is between 2014 to 2024. Now that we're talking about the 10 years of tomorrow, we want to double our shipment to 700 million devices in India," he added.

The company doesn't have any plan to bring its SU7 electric car (EV), which it will begin selling in China this year, to India for at least the next three years.

"Our co-founder has stated that for the next three years, our plans for EV are focused on the China market," the executive said.

India will still have a market for 4G devices because of price and network availability. "We are talking about an increase in 5G tariffs that will also play a role in the general adoption of 5G services. Needless to say, a majority of our shipments are 5G today," the executive added.