Dixon doubles mobile phone manufacturing sales, sets sights on 8.6G display fab pending India's semiconductor incentive

India-based EMS supplier Dixon Technologies reported significant increases in sales and profit over the past quarter, driven by a doubling in mobile phone manufacturing sales following acquisitions, such as Ismartu's Indian assets. Additionally, the company, having established a display assembly factory with China's HKC, plans to capitalize on the India Semiconductor Mission 2 to build a display fab.

On January 20, Dixon Technologies reported a net income of INR1.71 billion (approx. US$19.72 million) for the fiscal third quarter of fiscal 2025 (April 2024 to March 2025), which fell short of the average analyst estimate of INR1.98 billion despite delivering a robust year-over-year growth of 77%.

During the same quarter, revenue amounted to INR104.5 billion, exceeding the projected INR99.51 billion. Additionally, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) showed remarkable growth, rising to INR3.98 billion (approx. US$45.90 million) from INR1.86 billion (approx. US$21.45 million) in the corresponding period of the previous year.

Mobile and EMS

During the earnings call, Dixon Technologies said it had expanded its smartphone manufacturing by opening a new facility in Noida, boosting its capacity to over 60 million units annually across seven plants.

Dixon Technologies has seen significant growth in its smartphone business, producing 8.3 million units last quarter and 20.5 million units over nine months, alongside 25 million feature phones. The company has expanded its annual smartphone output from 5 million to an expected 28–30 million units this fiscal year. Future projections suggest orders of 40–45 million units, potentially reaching 60 million units, aiming for a 65–70% share of India's smartphone outsourcing market.

Ismartu, which became Dixon's subsidiary after the acquisition, invested INR1.33 billion in supporting production for brands like Nothing and Transsion, including Infinix, Techno, and Itel. Dixon targets exporting 3 million units to African markets next year, with 0.5 to 0.6 million units expected to ship by this fiscal year-end.

Dixon said it consistently produces over 1 million smartphones monthly for Motorola, with strong export orders forecasted. They have experienced continued volume growth for Xiaomi and Oppo and delivered their first production batch for a global brand with Compal in December 2024.

Dixon noted that its joint venture with Vivo India, in which Dixon will hold a 51% stake, awaits regulatory approval.

Display manufacturing and component ecosystem

During the earnings call, Dixon Technologies said it had chosen a site for its display manufacturing facility in collaboration with HKC, aiming to start production by late the first quarter or early the second quarter of fiscal 2026.

Dixon plans to build an 8.6G display fab that will have a monthly capacity of 60,000 substrates for applications, such as TVs, mobile phones, notebooks, tablets, and automotive uses, with an investment of US$2.7-3 billion. It is expected to generate US$1.7-2 billion in annual revenue with strong margins. The 8.6G plan is contingent on the potential India Semiconductor Mission 2 incentive scheme.

Robust growth in telecom and networking products

According to Dixon Technologies, its telecom and networking segment reported revenues of INR9.77 billion in the last quarter, showing a 48% increase from the previous quarter and projecting over fourfold growth compared to last year. Production began at their new Noida facility on November 24, 2024, to meet the rising orders from their main customer.

Dixon said there is increasing demand for products such as 5G FWA units, access points, GPON ONTs, and internet set-top boxes, prompting a plan to double production capacity. Following a successful pilot phase, mass production of IPTV set-top boxes has started.

IT hardware

Dixon Technologies said it is ramping up production of IT hardware products with a new dedicated facility in Chennai. Trial runs at this plant are scheduled to commence on February 25, 2025, and the company aims to achieve full production capacity by the first quarter of fiscal 2026 for major clients HP and Asus.

Meanwhile, Dixon said the production for Lenovo and Acer is already underway at Dixon's Noida facility. However, the current sales figures are modest since the operations are still in the trial production phase.

In a strategic move to broaden its market impact, Dixon is in advanced negotiations for a joint venture with a renowned global ODM. This partnership seeks to diversify Dixon's offerings into higher-value segments, including notebooks, servers, and additional IT products.

Dixon advances component strategy with a focus on camera modules

Dixon is advancing its strategy in precision components by focusing on camera modules and backward integration. The company said a new senior team is leading the expansion efforts, adding that the company aims to benefit from India's PLI scheme to support its camera module projects.

Dixon believes that backward integration and component manufacturing will help India create a self-reliant ecosystem and improve its low operating margins, especially in the Mobile and EMS sectors. These efforts are anticipated to boost the mobile segment's margin by 100 basis points within the next two to three years.

Source: Bloomberg, January 2024

Source: Bloomberg, January 2024