Dixon Technologies, India’s largest electronic manufacturing services (EMS) provider, has partnered with Taiwanese personal computer (PC) maker Acer for contract manufacturing of laptops, initially for the domestic market and later possibly for exports, according to industry sources.
The firm is utilising the government’s Production Linked Incentive (PLI) programme. According to sources, Dixon’s plant in India will begin producing 500,000 Acer laptops every year. The plant’s initial capacity will be roughly 700,000 laptops per year, increasing to one million in the next phase. The commencement of production is planned for December.
Dixon is also building a tablet manufacturing plant with a capacity of 2 million per year. Long-term contracts with global players are being discussed. Dixon declined to comment on the matter, and Acer did not respond to a request for comment via email.
To put the agreement in context, according to an EY and ICEA research from 2019-20, India imported computers worth $4.21 billion, accounting for 86 percent of the $4.85 billion annual laptop market. 87 percent of this was imported from China.
In addition, India’s laptop imports have climbed by 42% in five years, from $2.97 billion to $4.1 billion. Only a few businesses, such as HP, Dell, and Lenovo, manufacture laptops locally and in small quantities, either on their own or in collaboration with third parties. India’s value addition is estimated to be between 5 and 10%, according to government estimates.
Acer Dixon Partnership
Dixon falls under the IT hardware category of the PLI plan and is therefore eligible. Under the plan, the government has granted permission to 19 global and domestic players who have promised to produce around Rs 1.6 trillion in four years.
They are responsible for 37% of the entire value of exports. However, the incentives are tied not only to investment and incremental output but also at various phases of value addition, to increase the 5-10% by 2025 to 25%.
According to International Data Corporation (IDC), Acer had an 8.7% market share in India for PCs (notebooks, desktops, and workstations) in Q2 2021, making it the country’s fourth-largest vendor behind HP, Dell, and Lenovo.
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Acer’s shipments increased by 31.6 percent year over year in Q2 2021, owing to strong sales in the notebook sector (a total of 2.4 million laptops were sold), and shipments tripled from the same quarter last year.
Based on the industry average of 77 percent of the PC market is accounted for by laptops, Acer shipped 276,000 PCs this quarter, demonstrating how vital its partnership with Dixon can become in the Make in India effort.
Dixon will also be the first domestic company to begin exporting 5G millimetre wave band smartphones. It has inked a contract with Orbic in the United States to produce over one million phones each year, with Qualcomm providing technical assistance.
Orbic manufactures phones for a number of international telecommunications companies, including Verizon. Dixon’s objective is to participate in the PLI scheme, which is a production-linked incentive scheme in which it is one of five local enterprises.
Dixon, a Rs 4,400 crore EMS player, has made extensive use of the PLI scheme. It has also applied for telecom products in equity participation with the Bharti group, in addition to IT hardware and mobile devices.
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