Xiaomi is setting up three new smartphone factories in India to meet demand

By | 9th April 2018

Xiaomi is furthering its commitment to local manufacturing by setting up three new factories in India.

Xiaomi started assembling phones in India back in 2015 — committing to the government's Make in India initiative — and now the company is announcing that it is launching three new smartphone manufacturing facilities in the country. Xiaomi made the announcement at its inaugural Supplier Investment Summit, where it is hosting 50 global smartphone component suppliers to educate them about the intricacies of India's manufacturing ecosystem.

The goal with the summit is to facilitate component makes to set up shop in India. Although Xiaomi, Samsung, and other Android manufacturers have set up factories in India to locally assembled devices, the components for the phones are imported from other countries as there's no ecosystem yet in the subcontinent. With Xiaomi being the country's largest smartphone vendor, it is looking to drive the change on this front.

Should all the 50 suppliers decide to set up base in the country, Xiaomi says it would lead to the "biggest ever single investment in the electronic manufacturing industry," bringing in added investments of $2.5 billion and create over 50,000 local jobs. That's certainly an ambitious goal, and it remains to be seen whether there's enough skilled labor available for setting up component manufacturing facilities.

The new manufacturing facilities should alleviate long-standing supply issues.

Xiaomi started assembling phones back in 2015, with its first factory set up in partnership with Foxconn. A second factory followed last year, along with a powerbank plant that was set up in collaboration with Hipad Technologies in November 2017. Xiaomi says that over 95% of its phones sold in the country are locally assembled, which is an interesting statistic as it means an overwhelming majority of sales are from the budget Redmi series. The Mi Mix 2, then, accounts for less than 5% of Xiaomi's sales.

With its upcoming plants, Xiaomi is also looking to manufacture integral components that go into its phones. Its upcoming factory in Sriperumbudur, Tamil Nadu (also in partnership with Foxconn) will leverage Surface Mount Technology to locally manufacture Printed Circuit Boards (PCB). With the particular component making up almost 50% of the value of a phone, Xiaomi is looking to save costs by manufacturing it locally. The company says that by Q3 2018, nearly all of its locally assembled phones will come with PCBs made at its Tamil Nadu facility.

From Xiaomi India head Manu Jain:

Xiaomi's high-quality, well-designed products at honest prices have been instrumental in disrupting the Indian smartphone industry. In 2015 we extended our long-term commitment to the Indian market by joining the 'Make in India' programme. Today we are deepening this commitment with three more smartphone factories and our first SMT plant dedicated towards local manufacturing of PCBA units.

Xiaomi is one of the pioneers in the country to start local assembly of PCBAs, and I believe we will continue to play a key role in transforming India into a global manufacturing hub.

The new factories should hopefully make it easier for local customers to get their hands on Xiaomi's latest phones. Two months after its launch, the Redmi Note 5 Pro is still incredibly hard to get a hold of, and boosting local manufacturing should alleviate that particular issue.