Dixon Technologies India Ltd, a supplier to Xiaomi (OTC:XIACF) Inc, is set to inaugurate a vast new factory on the outskirts of New Delhi, marking another significant step in India's push for Chinese tech firms to use local assembly partners. The factory is expected to be inaugurated by a government official towards the end of September 2023.
The Noida-based contract manufacturing firm is investing more than four billion rupees (US$48.2 million or RM225.37 million) over three years in the facility, which spans over 300,000 sq ft - about the size of six football fields. The plant will primarily produce Xiaomi smartphones, according to anonymous sources familiar with the matter.
This move comes as Beijing-based Xiaomi has been urged to partner with Dixon for smartphone assembly, due to India's increasing pressure on Chinese companies to localize everything from manufacturing to distribution of devices. As a result, Xiaomi's older suppliers in India - Taiwanese Foxconn (SS:601138) Technology Group's Bharat FIH and China's DBG Technology Co - are likely to see a reduction in their business.
Earlier this year, Xiaomi took similar action by awarding a contract to India's Optiemus Electronics Ltd for the production of its Bluetooth neckband earphones, a product it previously imported from China. This partnership with Dixon is another boost for the home-grown company, one of several vying to become India's answer to Foxconn - Apple (NASDAQ:AAPL)'s Taiwanese supplier renowned as the key maker of iPhones.
Xiaomi, once an unrivaled leader in India's smartphone market, has faced regulatory scrutiny and admitted to overexpanding its product portfolio which confused customers. However, Xiaomi is banking on a gradual recovery as it aims to offer affordable locally made 5G smartphones in India - the world's second-biggest smartphone market.
The new facility in Noida is one of two such new facilities by Dixon, with the second expected in one of the southern Indian states. Once completed, the company aims to produce up to 1 million smartphones per month from its new facility.
Dixon is also one of the applicants for the Centre’s revised production-linked incentive (PLI) scheme for IT hardware. The manufacturer is already in talks with multiple laptop brands in India to strike assembly deals. These deals are expected to expand further, as the Centre pushes for more local manufacturing across all electronics categories.
On 3 August 2023, the Directorate General of Foreign Trade (DGFT) notified incoming restrictions on laptop imports, encouraging laptop brands towards more local manufacturing and assembly deals. While key components such as processors and display chips are still manufactured outside of India, the Centre is attempting to change this through various incentive schemes.
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