Domestic contract manufacturer Dixon Technologies is set to touch 30 million smartphone volumes in FY25 on the back of existing customers, recent deal wins largely from Chinese handset makers such as Xiaomi and Oppo, and other companies such as Google Pixel, according to company executives.
The benefit for the recent joint venture with Vivo, however, would come in FY26 for Dixon once the deal gets regulatory clearance, executives said, adding that the same along with other orders would take the smartphone volumes to around 45 million in the next financial year.
Dixon, currently, has a capacity of 50 million smartphones and 30 million feature phones across its four plants. In the first half of the current financial year, the company has already manufactured over 12 million smartphones excluding Samsung.
Notably, in FY24, the company produced 15 million smartphones. The company makes smartphones for major companies including Samsung, Xiaomi, Oppo, Ismartu (brands like Itel, Infinix, Tecno), Motorola, Pixel, and Nothing.
According to Counterpoint, Dixon has a share of 11% in smartphone contract manufacturing from January to September 2024 period. Currently, Samsung is the market leader in EMS (electronics manufacturing services) play with 20% market share as it manufacturers its own smartphones.
“Joint venture with Vivo will give a push to Dixon’s profile of smartphones and enhance its volumes. We expect Dixon to soon increase its EMS market share in smartphones to 20% levels,” said Tarun Pathak, research director at Counterpoint India.
According to Pathak, Dixon will also look forward to expanding operations to scale beyond assembly and drive more value addition in India.
On Sunday, Dixon and vivo India entered into a binding term sheet for a proposed joint venture to undertake OEM business of electronic devices, including smartphones. Dixon will hold 51% of the share capital and Vivo India will hold 49% of the share capital in the proposed joint venture entity.
Besides cost benefits and localisation, industry executives also linked the announcement from Vivo specifically, as a way to appeal to the government about the focus of Chinese companies on manufacturing in India.
According to analysts, in India Vivo has an annual smartphone shipments of about 25-28 million to dealers.
Faisal Kawoosa, chief analyst at Techarc said, “For Dixon, it is a way to get access to a mature ecosystem for components that Vivo has, and is lacking in India so far. This way, the entire value chain gets built out for contract manufacturing on electronics for Dixon.”
“For Vivo, one can look at it as a way to build credibility and trust among trade partners (distributors and retailers ) since it will now be seen as an investor in Indian manufacturing and not just a foreign brand with retail presence in the country,” Kawoosa added.
According to an industry executive, Vivo will most likely use the JV for its mass segment models, not the premium and super premium models for which it may want to guard the design specifications more closely.
Dixon, which is also a beneficiary of the smartphone production-linked incentive (PLI) scheme, is also expected to benefit from the recent deal wins and increase in productions as it will be able to claim further incentives, analysts said.
“We have a healthy order book for Transsion group of brands that’s Tecno, Infinix and Itel and another brand Nothing. For Motorola, we have been consistently clocking a volume of 1 million per month, and the order book looks healthy in the coming months, including some decent export orders for the North America market,” said Atul Lall, managing director and vice chairman of Dixon Technologies, in a recent earnings call.
According to Lall, the volumes for Xiaomi and Oppo are seeing significant growth.
On Monday, Dixon shares closed up 4.9% at Rs 18,832.10.
