China's Xiaomi sets up 3 new smartphone manufacturing units in India
New Delhi: Chinese handset maker Xiaomi said on Monday that it has set up three new smartphone manufacturing units in Tamil Nadu and Andhra Pradesh as also a facility for printed circuit board (PCB).
The expansion in capacity will help Xiaomi produce more devices locally to meet the demand and consolidate its position in the hyper-competitive Indian smartphone market.
"We had two facilities for smartphone manufacturing earlier. Now, we have added three more in Sri City, Andhra Pradesh and Sriperumbudur in Tamil Nadu. These are in partnership with Foxconn," Xiaomi VP and India Managing Director Manu Jain told reporters here. Besides, a small number of phones are also being made in Noida with another partner - Hipad, he added.
While he didn't disclose the investment details, Jain said this will double Xiaomi's manufacturing capacity in India to two phones per second during operational hours. These facilities employ over 10,000 people and 95 per cent are women, Jain added. Xiaomi is also setting up a new PCB assembly unit in Sriperumbudur in partnership with Foxconn.
"We are committed to manufacturing in India. PCB is 50 per cent of the value of a phone... By Q3, all Xiaomi phones made in India will have PCBs that are locally assembled," he said.
The announcement comes within a fortnight after the Indian government levied 10 per cent import duty on some key smartphone components, including populated PCBs.
Currently, Samsung is the only player in the country with such a facility. Players like Vivo and Oppo are also believed to have started working on bringing PCB manufacturing to India though no official announcement has been made yet. According to Counterpoint Research Associate Director Tarun Pathak, the move can help in sourcing and ironing out supply chain issues that are very critical in product planning, especially for companies like Xiaomi that work on a razor thin margins. "Xiaomi's PCB assembly announcement should make it the second largest brand in terms of value addition in India after Samsung. This would increase their (Xiaomi's) value addition from single digit to close to 15 per cent," he added.
The government has been taking a number of steps to promote electronics manufacturing in the country, including mobile phones. While assembly of mobile phones has been gaining traction, the focus is now on component manufacturing as a significant chunk of these are still imported from countries like China.
Xiaomi, which is among the top three smartphone players in the country, is also hosting over 50 of its global suppliers in India. These companies will be visiting Andhra Pradesh and Uttar Pradesh to explore investment opportunities to set up local manufacturing base.
"If these companies choose to invest here, there is an investment opportunity of over Rs 15,000 crore and can generate employment for over 50,000 people," Jain said.
Niti Aayog CEO Amitabh Kant, who was present at the event, assured the companies of support in setting up base in India, with facilities like single-window clearance.
India is one of the fastest growing mobile phone markets globally. According to research firm IDC, about 288 million mobile phones were shipped in India in 2017, which translates into an annual growth of close to 16 per cent. Smartphones grew 14 per cent in the said period.
Samsung led the market with 24.7 per cent share in smartphone category and 20.5 per cent share in feature phone category for 2017. Xiaomi followed Samsung with 20.9 per cent share, Vivo 9.4 per cent, Lenovo 7.8 per cent and Oppo 7.5 per cent share in smartphone segment in the year.