Dixon is an eligible player for the PLI scheme under the IT hardware category
Dixon will also be the first domestic manufacturer to start exporting 5G millimeter wave band mobile phones
In a big push for ‘Make in India’, Dixon Technologies, the country’s largest electronic manufacturing services (EMS) player, has tied up with Taiwanese personal computer (PC) maker Acer for the contract manufacturing of laptops, initially for the domestic market and then possibly for exports, say sources in the know.
The company is taking advantage of the government’s Production Linked Incentive (PLI) scheme. Sources say Dixon will start with the production of 500,000 Acer laptops annually in its plant in India. The plant’s capacity initially will be around 700,000 laptops per annum, going up in the next phase to one million. Production is expected to start in December.
Dixon is also putting up a 2 million per annum plant to make tablets. Talks are on for long-term contracts with global players. Dixon declined to comment on the issue, while Acer did not respond to an email seeking comment.
To see the deal in perspective, a report by EY and ICEA in 2019-20 had said India imported laptops with a value of $4.21 billion, which accounted for a staggering 86 per cent of the $4. 85 billion per annum laptop market. Out of this, 87 per cent was imported from China.
Further, India’s laptop imports have increased by 42 per cent from $2.97 billion to $4.1 billion in five years. Only a handful of companies, including HP, Dell and Lenovo, manufacture laptops locally and in very limited numbers, either on their own or with third-party players. According to government estimates, the value addition in India is not more than 5-10 per cent.
Dixon is an eligible player for the PLI scheme under the IT hardware category. The government has given permission under the scheme to 19 global and domestic players, which have committed themselves to production worth over Rs 1.6 trillion in four years.
Exports committed by them are 37 per cent of the total value. However, the incentives are also pegged not only to investment and incremental production but various stages of value addition so that 5-10 per cent can go up to 25 per cent by 2025.
According to International Data Corporation (IDC), Acer had a PC (notebooks, desktops and workstations) market share in India of 8.7 per cent in Q2 2021, making it the fourth largest player in the country behind HP, Dell and Lenovo.
In Q2 2021, Acer saw a substantial growth of 31.6 per cent in shipments year-on-year on the back of strong sales in the notebook segment (a total of 2.4 million laptops were sold) and shipments tripled from the same time a year ago, according to IDC.
Acer shipped 276,000 PCs this quarter and, based on the industry average that 77 per cent of the PC market is accounted for by laptops, this shows how important its tie-up with Dixon can become in the push for Make in India.
Dixon will also be the first domestic manufacturer to start exporting 5G millimeter wave band mobile phones. It has signed a contract with US-based Orbic to make over one million phones a year for which it has received technology support from Qualcomm.
Orbic supplies the phones for numerous global telcos – Verizon, amongst others. This again is part of Dixon’s plan under the PLI scheme production linked incentive scheme where it is one of five domestic companies which have become eligible for incentives.
Dixon, a Rs 4,400 crore EMS player, has leveraged the PLI scheme in a big way. Apart from IT hardware and mobile devices, it has also applied for telecom products in equity participation with the Bharti group.