Foxconn group firm Bharat FIH’s sprawling campus close to Chennai, which was centered on manufacturing Android telephones, is trying to faucet newer segments in a bid to diversify and offset a stoop in orders from its key shopper Xiaomi, since a authorities crackdown on Chinese language companies working in India.
Bharat FIH is now trying to energy progress in segments reminiscent of telecom gear, electrical autos, televisions and shows.
In response to the corporate, the power at Sriperumbudur is essentially getting used now for surface-mount know-how (SMT) operations with some meeting, testing, marking, and packaging (ATMP) operations for particular segments.
Confirming the diversification technique, Bharat FIH mentioned it was leveraging on its success in smartphones to make strides in newer segments reminiscent of EVs. The corporate declined to reveal the Sriperumbudur plant’s working capability, which it mentioned was an element of buyer demand, planning and prevalent market situations. Nonetheless, the corporate was fast so as to add that it has “distinctive functionality” to increase capability as per buyer wants.
“Beginning with smartphone manufacturing beneath Make in India, Bharat FIH has adopted the GOI’s imaginative and prescient and roadmap of constructing India self-reliant in electronics manufacturing,” the corporate mentioned in an announcement to ET. “We began manufacturing telecom and networking merchandise with the announcement of a Manufacturing Linked Incentive (PLI) in that section. We’re additionally a beneficiary of the IT {Hardware} PLI and are exploring enterprise inside the similar. Our endeavour can be to assist GOI’s localization plans for every product class.”
Somebody conscious of Bharat FIH’s operations mentioned that in 2021, Xiaomi accounted for 95% of the corporate’s operations. However final yr, with its transfer to diversify into newer segments, the corporate has managed to carry down this quantity to 40% in 2023.
Nonetheless, specialists ET spoke to mentioned Bharat FIH was “closely and solely dependent” on Xiaomi’s enterprise which has significantly impacted its scale and the necessity to diversify past the only Chinese language model and smartphones. The corporate primarily made gadgets for Xiaomi moreover some quantity for Nokia, however it would not qualify for PLI advantages as the worth of the handsets is lower than INR 15,000. World companies get incentives solely on gadgets above INR 15,000 whereas the native companies avail advantages on all of the gadgets, regardless of value of a handset.
Xiaomi’s handset manufacturing in India declined to lower than 30 million models as gross sales plunged 38% in 2023 in comparison with 2021, as per analyst estimates.
Whereas the federal government crackdown was actually a vital issue hurting Bharat FIH, Neil Shah, vp at cellular gadgets analytics agency Counterpoint Analysis mentioned it was a double whammy because the Chinese language smartphone large additionally started increasing its Electronics Manufacturing Providers (EMS) associate base.
“Xiaomi has been seen diversifying its EMS companions past Bharat FIH and has onboarded different EMS companions reminiscent of DBG, Padget amongst others, which has seen enterprise from Xiaomi for Bharat FIH go down by 70% in 2023 versus 2021,” Shah mentioned.
India’s cell phone contract manufacturing market is dominated by homegrown producer Dixon with a 32% share, adopted by Foxconn, and DBG Group, which makes Xiaomi and Realme smartphones. Bharat FIH is at fourth place with a single-digit market share.
Consultants nevertheless, warned that the diversification will take time to bear fruit.
“It is going to take a while as these segments are already seeing established native gamers already garnering some good scale like Dixon, Padget and Radiant,” Shah added.
Bharat FIH, erstwhile Rising Star, was amongst 5 world companies chosen in 2021 to avail advantages beneath the PLI scheme for smartphones. The opposite 4 companies are Foxconn Hon Hai, Pegatron, Wistron –all contract producers of Apple and Samsung.
Bharat FIH, additionally a Foxconn group firm, failed to fulfill its manufacturing targets even as soon as in three years of the scheme. Consultants imagine that for the remaining two years, the corporate won’t get any incentive.
Failure to fulfill the targets prices Bharat FIH a few thousand crores rupees yearly, which it might have availed in case it met the targets. In distinction, Foxconn Hon Hai, which makes iPhones, has far exceeded the targets.
In response to analysts, India’s smartphone market is anticipated to stay stagnant in 2024 at round 146 million models. The market is forecast to develop marginally to achieve 151 million models in 2025 however for companies like Bharat FIH, it will be tough to compete with established gamers like Dixon. Additionally, Samsung and Chinese language gamers like Oppo and Transsion have their very own manufacturing models in India.
