Is Dixon-Vivo JV a game-changer for India’s smartphone industry?

The partnership will focus on manufacturing smartphones and other electronic devices for Vivo in India. Apart from Vivo, it may also provide OEM services to other brands such as Samsung, Xiaomi, Motorola, Oppo, Transsion, Google, and Nothing.

Partnership Terms

The partnership positions Dixon as a majority stakeholder with a 51% stake in the JV while the remaining 49% stake will be held by Vivo India. However, neither Dixon nor Vivo India will have any stake in each other beyond the JV. This ensures operational autonomy.

Revolutionising india’s smartphone industry

The Dixon-Vivo partnership is not just a corporate alliance, it is a significant milestone in India’s journey towards becoming a global smartphone manufacturing hub. Given Dixon’s electronic manufacturing expertise and Vivo’s strong leadership in the smartphone market, we can say that this partnership has the potential to reshape the industry.

Powering 'Make in India' with local manufacturing

The collaboration also aligns with the government’s ‘Make in India’ initiative, which will contribute to domestic manufacturing, reduce import dependency, and create job opportunities in the country. 

This means the Dixon-Vivo partnership will significantly enhance Vivo’s manufacturing capabilities, giving a solid push to localised production.

Strengthened local manufacturing will further drive economic growth and set the stage for a more competitive and self-reliant smartphone market in India.

Government’s push to engage local players

Lately, Chinese smartphone brands have been under strict scrutiny in India following allegations of tax evasion, non-compliance and money laundering. In response to this, the Indian government has asked these brands to have Indian management and Indian equity partners in their local operations.

Because of tightened government rules, more and more Chinese smartphone makers like Vivo, Oppo and Xiaomi are increasingly looking to bring Indian partners into their manufacturing operations.

This could also be a big reason for the Dixon-Vivo joint venture.

A win-win approach

We can expect a lot of synergies in action for both companies.

The collaboration is expected to boost Vivo’s market presence. The increased manufacturing capacity and reduced production costs will help the company strengthen its market share in India’s price-sensitive smartphone segment.

Dixon will also benefit from teaming up. The move is expected to enhance Dixon's position as a market leader in the electronics manufacturing space.

Financial impact and market response

Well, the partnership announcement also buzzed the market!

Following the announcement, the shares of Dixon Technologies (India) made a 52-week record high of ₹19,148 on the NSE on December 17, showing a positive impact on the stock price.

If you look at the year-to-date performance, Dixon has been on a bull run in 2024. The company has gained around 200% in one year.

A look at Dixon’s financial performance

The company’s consolidated revenue for the quarter ended September 2024 was ₹11,534 crore, compared to ₹4,943 crore in September 2023, representing a year-on-year growth of 133%.

The company's revenue from mobile phones and EMS divisions for the quarter ended September 2024 was ₹9,444 crores, compared to ₹2,819 crore in September 2023, representing a year-on-year growth of 235%.

The operating profit for the same period grew from ₹93 crore to ₹308 crore, representing a year-on- year growth of 231%.

Dixon and Vivo’s joint venture looks promising with a huge potential to reshape the industry. This partnership might just redefine India’s role in the global smartphone ecosystem.

Having said that, Dixon and Vivo will have to face tough competition from global giants like Apple and Samsung who are also scaling their operations in India.

Will this partnership live up to its promise? Let’s wait and watch!