Smartphone Manufacturing Sector in India - Overcapacity is Unavoidable

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The uninterrupted Smartphone growth in India coupled with "Make in Initiative" launched by Government of India with many tax riders raised eyebrows of established Smartphone player as well as contract manufacturer.

Foxconnoffers 2.5 Mn handset manufacturing per month capacity with more than 25 assembly lines and in the process of adding 10 more lines. The Client list of Foxconn include Microsoft, XiaomiOppo, Gionee, Asus and American brand Infocus
Optiemus Infracom which owns Zen Mobiles along with Taiwan-based OEM Wistron Corporation will commission its first factory by march 2016. It will have 16 Smartphone assembly line with installed Smartphone manufacturing capacity of 1.5 Mn per month.

Karbonn Mobile also jumped into manufacturing space by collaborating with VSUN and came out with 22 Smartphone assembly line with the monthly manufacturing capacity of 2.5 Mn per month. Karbonn Mobile made its intention clear that they will be investing multi million Dollars in due course to be the leader in the space .Intex investment in Greater Noida to expand its manufacturing capacity to speed up Go to market time of their devices or accessories in order to reduce the cycle time. Lava also earmarked multimillion Dollar to expand their manufacturing plant to fulfill their Smartphone device segment requirement as well as act as ODM for other OEM's willing to tap Indian market,

Micromax already started manufacturing mobile phones at its Rudraprayag facility inUttarakhand. Lenovo, one of the fastest growing brands is already procuring Smartphone through its contract manufacturer Flextronics. Other Smartphone player like Celkon, Spice and Videocon already manufacture their own Smartphone. India number one Smartphone player already manufacture their device in their one of the plant located in Noida. Last but most importantly, there are 100's of other manufacturers who entered into the segment with small number of assembly line in order to tap unbranded mobile handset player by offer them price benefits.

If we calculate the total capacity already in the market place then it is higher than total expected consumptions in Indian market place. Many of the Smartphone players are also using India as Manufacturing hub to export their Device to other countries such as CIS or Africa where they see huge potential. It is expected that more and more capacity will be added in due course. It is a known fact that replacement cycle in India is 2 years and over capacity may lead to a scenario where contract manufacturing price war start very soon which will dent in RoI of above mentioned players.

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