India's own Foxconn? Dixon's PLI-powered road map may reshape electronics

Dixon is transitioning from being predominantly domestic assembler - smartphone assembly accounted for 89 per cent of its revenue as of Q3 FY25 - to becoming a deeper player in electronics value chain

Dixon Technologies has earned a rare distinction: it is the only Indian company ranked among the top 20 global electronic manufacturing services (EMS) players by revenue in 2024, according to research agency Manufacturing Market Insider. In a league dominated by heavyweights like Foxconn, Pegatron, and Luxshare, Dixon’s presence is a significant achievement for a homegrown brand.

 

Still, the scale difference is stark. Dixon’s 2024-25 (FY25) revenues, at ₹38,860 crore, are just a quarter of

Foxconn’s revenues from India alone (₹1.72 trillion), thanks largely to Apple Inc, which remains the dominant force in the Indian EMS landscape.

 

Yet, Dixon has set its sights high. The company aims to break into the top 10 of the global EMS rankings within the next three years. That will require it to more than double its revenues — an ambitious but not impossible leap.

 

Assembler to value chain anchor

 

To fuel this growth, Dixon is transitioning from being a predominantly domestic assembler — smartphone assembly accounted for 89 per cent of its revenue as of Q3 FY25 — to becoming a deeper player in the electronics value chain. The strategy: aggressive backward integration into sub-assemblies and components. 

 

To kickstart the strategy, Dixon, last week, announced two key partnerships with Chinese firms. First, it will acquire a 51 per cent stake in Qtech India, which is part of China’s Qtech Group that makes mobile camera and fingerprint modules in India for original equipment manufacturers (OEMs) such as Vivo and Oppo. Second, it plans a joint venture with Chongqing Yuhai Precision, with a 74 per cent stake to manufacture precision mechanical and metal parts and components for mobile phones and laptops. 

These developments come on the heels of an earlier JV announcement with China’s HKC to make display modules for smartphones, laptops, and tablets — a deal that will need government approval, as will the others.

 

Explaining the rationale, Sunil Vachani, chairman of Dixon Technologies, says: “The plan to invest in display modules, mechanicals and other components is to ensure that we are completely atmanirbhar (self-reliant) in terms of local sourcing and enhancing local valuation.”

 

Will these moves elevate Dixon’s global play? Vachani is confident they will. “They will add to our global competitiveness and improve margins over time, and bring the entire supply chain to India, which is critical to emerge as a global player.”  

 

Exports currently contribute just 9 per cent of Dixon’s revenues, primarily driven by Motorola smartphones. The company wants to push that share to 20 per cent by tapping into the $140 billion global smartphone and IT hardware market.

 

Betting big on components

 

Dixon’s aggressive electronic component strategy, which includes three major measures, could be a game-changer. Sub-assemblies and components contribute about 35 per cent of a smartphone’s and 28 per cent of a laptop’s bill of materials (BoM).

Nomura estimates that Dixon’s current BoM share — a mere 8-10 per cent — could rise to over 30 per cent once these component ventures scale, significantly increasing customer stickiness and creating a competitive moat.

 

To back this ambition, Dixon is investing over ₹1,300 crore across its three component projects.

 

The company’s fundamental playbook has remained consistent: build scale in the domestic market by aggregating demand from global brands by leveraging the production-linked incentive (PLI) scheme; pass on part of the incentive benefits to OEMs; and reinvest the rest into expansion. The result? Low debt and strong growth.

 

After Apple, Dixon has been among the largest beneficiaries of the PLI scheme — spanning segments from mobile phones to IT hardware and telecom equipment.

 

Now, it plans to tap into the ₹22,919 crore PLI scheme for electronic components, which offers capital investment support and incentives based on production value. This could help it tide over India’s cost disadvantages compared to China and Vietnam, and boost the country’s global price competitiveness. 

 

Scaling up across the board

 

Dixon’s largest business — smartphone assembly — has seen significant capacity expansion. Through organic growth and acquisitions (including a majority stake in Transsion Holdings’ India plant), it now has an annual capacity of 40-50 million smartphones, the largest in the country. It assembles for Motorola, Xiaomi, Samsung, Transsion, Nokia, and even Alcatel.

If the deal with Vivo, where Dixon would manufacture exclusively for the Chinese OEM and hold a 51 per cent stake, is cleared, overall capacity could soar to 75-80 million units. That’s more than half of India’s 140 million Android smartphone sales.

In camera modules, Dixon is replicating this scale play. Qtech, which mostly makes lower and mid-priced modules, sold 50 million camera modules per annum to Indian OEMs (addressing the need of 15 million Android phones).

 

Display modules are another focus area. Dixon executives say the plan is to set up a facility to assemble 40 million display units annually — enough to meet a fourth of the domestic demand from smartphone and laptop makers.

 

The company’s entry into mechanical components will, however, begin more cautiously. Initial efforts will focus on India’s relatively modest 15-million-unit a year laptop market. Dixon executives say they are aiming at a 10 per cent share, and will use the learnings to expand to the bigger smartphones market.

 

Challenges on the horizon

 

Despite the bold moves, there are challenges. Sceptics point to Dixon’s overdependence on Chinese collaborations — at least four such JVs are awaiting a green signal from the government. The lingering India-China geopolitical tensions aren’t helping.

“I think this is a big risk because after Press Note 3 was issued in 2020, the government has neither cleared nor rejected Chinese JV foreign direct investment (FDI) proposals. How long can one wait?” says a senior executive from a rival EMS company who does not wish to be named. Press Note 3 regulates FDI from countries that share a land border with India, mandating government approval for all such investments. It primarily targets investments from China, and replaces the automatic route that earlier governed most FDI.

 

On the domestic front, too, competition is heating up. Lenovo-owned Motorola, once responsible for 72 per cent of Dixon’s smartphone assembly value, has started diversifying its vendor base, onboarding Karbonn as an additional supplier. That’s likely to dent Dixon’s volumes.

 

And with the current PLI scheme for mobile devices set to end in FY26, Dixon’s returns could take a hit. PhillipCapital projects a decline in return on capital employed, Ebitda margins, and profit after tax once the incentives stop. Dixon has been lobbying for the PLI scheme to be extended for a few years.

 

However, for Vachani, the new strategy is a calculated gamble. He has structured Dixon’s deals with the Chinese carefully so as to maintain majority control — between 51 per cent and 76 per cent — to be in line with the government’s willingness to reconsider its earlier stance of putting such proposals in cold storage. 

 

For instance, late last year, the government had approved a JV between Bhagwati Products and Chinese ODM Huaqin Technology, where the latter holds a minority stake, for mobile phones.

 

Moreover, in deals like Qtech, Dixon is acquiring an operational Chinese-owned Indian factory, which would not require any FDI — thus, potentially sidestepping regulatory bottlenecks.

 

Besides, Dixon is not betting only on China. In the PC and server space, it has forged a JV with Taiwanese major

Inventec to manufacture laptops and servers, diversifying its bets as it scales new verticals.

 

With these moves, Dixon is positioning itself as the “Foxconn” for non-Apple smartphone brands in India — a bold aspiration, but one that may not be far-fetched if its strategy aligns with geopolitical and market realities.