Dixon looks to buy China handset co's local unit

Dixon Technologies, India’s largest electronics contract manufacturer, is in initial talks to buy a majority stake in the local phone-making unit of China’s Transsion Holdings, people aware of the details told ET.

Transsion’s India business is valued at about Rs 700 crore, they said.

The talks come amid greater scrutiny of Chinese firms operating in the handset ecosystem. The Centre wants Indian companies and executives to have more sway over the country’s mobile phone industry, currently dominated by Chinese handset brands, as part of an informal mandate, according to people with knowledge of the matter.

Transsion Holdings, which makes smartphones and feature phones for its brands Techno, Infinix and Itel, has a capacity of 25-30 million units at its three manufacturing units in Noida. The three brands together have a 14% share of India’s overall mobile handset market and an 8% share of the smartphone segment.

Dixon makes smartphones and feature phones for brands such as Xiaomi, Motorola, Samsung and Jio among others. It has a manufacturing capacity of 30 million smartphones and 50 million feature phones at its four plants in Noida.

“It (the deal with Transsion) can possibly help in scaling up and ultimately reaching PLI (production-linked incentive) targets in an accelerated time frame under the scheme. Also, scale puts Dixon in a favourable position to attract new clients and enter related electronic categories,” said Navkendar Singh, associate vice president, IDC India.

Dixon and Transsion didn’t respond to queries.

Chinese firms have been under pressure in India over the past few years amid a spike in border tension. The move for a bigger Indian role in the mobile phone ecosystem is aimed at boosting local companies. Currently, Chinese handset brands have over 70% of the Indian mobile phone market.

Industry executives told ET that several Chinese firms are looking to either outsource their manufacturing to Indian companies or have a joint venture with local partners. The government is clear that in the case of a joint venture, the Indian entity should have a stake of at least 51% that will give it control. Officials told ET that the government would support such tie-ups as it will help in developing an ecosystem in India.

According to Counterpoint, Dixon leads in mobile phone contract manufacturing with a 32% market share, followed by Foxconn, which makes iPhones, and DBG Group, which makes Xiaomi and Realme smartphones.

Dixon, however, trails South Korea’s Samsung and China’s Oppo among overall mobile phone manufacturers with a 14% share, said Counterpoint. Oppo makes Realme and OnePlus smartphones apart from those sold under its own brand.

Since the start of the PLI scheme in 2021, Dixon has emerged as one of the leading mobile phone manufacturers in the country. It has been consistently achieving PLI targets and receiving incentives while other domestic companies have been lagging behind, say analysts.

“We believe that Dixon’s growth in the mobile phone segment is going to sustain in the upcoming years as well,” Tarun Pathak, research director at Counterpoint, told ET.

William Murphy

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