Xiaomi makes strategic shift, partnering with first Indian EMS for smartphone manufacturing amid regulatory scrutiny in India

Jingyue Hsiao, DIGITIMES Asia, Taipei 0

Credit: AFP

Dixon's fully-owned subsidiary, Padget Electronics Private Limited, has agreed with Xiaomi to produce smartphones and other associated products for Xiaomi. This manufacturing will occur at Padget's facility located in Noida.

According to Equity Bulls, Atul B. Lall, vice chairman and managing director at Dixon Technologies, said it's an immense pleasure to partner with Xiaomi, and the company is delighted and encouraged by the trust they have placed in Dixon, adding that the partnership represents a major milestone in the Indian government's "Make in India" initiative. Furthermore, Lall said that Dixon sees Xiaomi as an ideal strategic partner, and the partnership will be just the beginning of a long and prolific relationship.

According to The Economic Times, this development follows a prior announcement in May, when both parties met with Minister of State for Electronics and Information Technology Rajeev Chandrasekhar at his office to discuss the exploration of manufacturing and export opportunities. Bloomberg earlier in September quoted sources saying that Dixon would invest INR4 billion (US$48.2 million) over three years to set up a new factory to make products for Xiaomi.

Dixon makes some models of Samsung-branded mobile phones and is making Smart TVs in India for Xiaomi. The partnership is the first time that Xiaomi has outsourced smartphone manufacturing to an Indian EMS. Previously, Foxconn's Indian subsidiary and Flex were making Xiaomi phones in India.

The partnership may also be viewed as an effort by Xiaomi to remain relevant in the world's second-largest smartphone market amid India's regulatory scrutiny against China-based smartphone vendors. Before the partnership of Dixon and Xiaomi, China-based smartphone brands outsourced their phone manufacturing to China-based or Taiwan-based manufacturers in India, and Indian EMS providers did not benefit from China-based smartphone brands' high market share in India. The Indian government even accused Chinese companies of outsourcing their smartphone distribution business to Chinese companies in India.

Source: Bloomberg, September 2023