China's Xiaomi said it wants its global smartphone component makers to set up base in India, in what could potentially bring as much as $2.5 billion of investment to the South Asian nation and create as many as 50,000 jobs.
China’s Xiaomi said it wants its global smartphone component makers to set up base in India, in what could potentially bring as much as $2.5 billion of investment to the South Asian nation and create as many as 50,000 jobs. The move could boost Prime Minister’s Narendra Modi’s flagship ‘Make in India’ drive. Modi wants to turn India into a global manufacturing hub in a bid to boost job growth in Asia’s third-largest economy.
Xiaomi announced the opening of three more smartphone plants in India — along with the company’s first Surface Mount Technology (SMT) plant in Chennai that will manufacture printed circuit board assembly (PCBA) units in the country. The three new smartphone plants — in partnership with Foxconn — are located across campuses in Sri City, Andhra Pradesh and a new campus in Sriperumbudur, Tamil Nadu. The factories with Foxconn now employ more than 10,000 people, of which more than 95 per cent are women. While the company didn’t disclose investment details, it said the move will double its manufacturing capacity in India.
New Delhi has a roadmap to increase local assembly of smartphones and last week it announced a 10 percent duty on the import of key smartphone components, including populated printed circuit boards (PCBs), as part of the plan. Xiaomi hosted 50 of its global suppliers in New Delhi at an investment summit on Monday, which was also attended by Amitabh Kant, CEO, Niti Aayog; Ramesh Abhishek, Secretary, DIPP and Deepak Bagla, CEO, Invest India. These companies will be visiting Andhra Pradesh and Uttar Pradesh to explore investment opportunities to set up local manufacturing base.
If all 50 suppliers were to set up shop in India, it would bring in $2.5 billion in investment and create as many as 50,000 jobs, Xiaomi said. Xiaomi itself now has six smartphone manufacturing plants in India, its biggest market behind China.
“We had two facilities for smartphone manufacturing earlier. Now we have added thee 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. He said, with this, the company can now manufacture 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. “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.
With the first SMT plant dedicated towards local manufacturing of PCBA units in Chennai, Xiaomi has also become one of the pioneers in the country to start local assembly of PCBAs. PCBA is the process of soldering or assembly of electronic components to a PCB or printed circuit board. SMT is a method for producing electronic circuits in which the components are mounted or placed directly on to the surface of PCBs. PCBA is one of the most important components of the smartphone, and contributes to nearly 50 per cent of the value of the phone.
Xiaomi expects to ramp up its PCBA production to close to 100 per cent of its locally-produced phones within the third quarter of the calender year 2018. According to Tarun Pathak, Tarun Pathak, Associate Director at Counterpoint, Xiaomi’s PCBA announcement should make it the second largest brand in terms of value addition in India after Samsung. “The move should increase Xiaomi’s value addition from single digit to close to 15 per cent,” Pathak said.
With an overall market share of 26.8 per cent (as per Q4 IDC Quarterly Smartphone Tracker 2017), Xiaomi is also the number one player in the online smartphone segment with 57 per cent market share and the number two smartphone player in the offline space with 11.2 per cent market share.