Google parent Alphabet has chosen Dixon Technologies, a local contract manufacturer, to produce Google Pixel 8 smartphones in India. According to The Economic Times, the trial production of Google Pixel 8 by Dixon Technologies in India has already started and the first batch is expected to be available by September.
Google’s commitment to manufacturing in India became public in October last year when Alphabet CEO Sundar Pichai talked about the development on X, formerly Twitter. He shared Google’s plan to start making Pixel smartphones locally, with the first device expected in 2024. He also expressed appreciation for the support of the Make In India initiative and emphasized their dedication to being a reliable partner in India’s digital growth.
Atul Lall, managing director of Dixon Technologies, hinted at this development during the company’s earnings call on May 15, revealing plans to start manufacturing smartphones for a major global brand through Compal by September, without disclosing specifics.
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All you need to know about Dixon TechnologiesÂ
Dixon Technologies, founded in 1993 by Sunil Vachani, is a prominent contract manufacturer in India. The company is the largest manufacturer of LED TVs in India, producing for brands like Samsung, Panasonic, Xiaomi, TCL, and OnePlus. In addition to TVs, Dixon manufactures lighting products for companies such as Philips, Havells, Syska, Bajaj, Wipro, and Orient.
The company also leads in production of semi-automatic washing machines for clients like Godrej, Samsung, Lloyd, and Panasonic. Furthermore, Dixon is expanding its presence in mobile phone manufacturing, focusing on increasing smartphone production.
Dixon operates under two business models: OEM (Original Equipment Manufacturer) and ODM (Original Design Manufacturer). Under the OEM model, Dixon sources parts and assembles products based on client specifications. In contrast, the ODM model allows Dixon to handle everything from product conception to production, including design and material selection.
The company’s financial growth has been remarkable. From FY13 to FY23, Dixon’s revenue increased from Rs. 726 crore to Rs.6997.4 crore, while net profit grew from Rs. 2 crore to Rs 211.15 crore. Since its stock market listing in 2017, Dixon’s share price has surged by 570%.
However, Dixon faces challenges, including operating on thin margins, typically around 3-4% for the OEM business. The company’s revenue is highly concentrated, with 50% coming from just two clients and 80-85% from five clients, making its success heavily dependent on these relationships.
Looking to the future, Dixon aims to significantly increase its smartphone production from 3 million to 20 million units. They have secured significant orders from Motorola, worth Rs 3000 crores, and Nokia, estimated at Rs 4000 crores. While Dixon is poised for growth with these new orders and expanding production capacity, the company must navigate the inherent risks of the contract manufacturing industry.
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