Tata reportedly in talks with Xiaomi and Oppo for smartphone manufacturing expansion

Tata Electronics is reportedly in negotiations with Xiaomi and Oppo to assemble smartphones, marking a strategic expansion beyond iPhone case manufacturing. This move reflects a trend where established EMS/ODM providers pursue more profitable ventures, creating opportunities for emerging EMS providers amid the global shift in production beyond China into emerging economies.

Strategic market expansion

The Economic Times, citing sources, reported that Tata Electronics is in talks with Xiaomi and Oppo to start contract manufacturing their smartphones as it seeks to scale up and diversify its components. While discussions were also held with Vivo, the latter might not outsource phone manufacturing to Tata Electronics due to its joint venture with India's Dixon Technologies, announced in December 2024.

Additionally, The Economic Times reported in December 2024 that Tata Electronics held talks with Microsoft, Dell, HP, and other companies for product assembly or electronic component supply.

Industry experts suggest that smartphone vendors in India might consider outsourcing to Tata Electronics if they trust its manufacturing capabilities, as this could help them diversify suppliers and enhance their bargaining power.

Manufacturing expertise development

According to the report, Prabhu Ram, head of the industry intelligence group at Cybermedia Research, described Tata Electronics' strategy as a bold move to develop the manufacturing expertise and ecosystem required to become a significant player in the global electronics supply chain and support multiple tech giants.

Ram added that by expanding beyond Apple to include major Android OEMs, Tata Electronics aims to achieve the necessary scale and sophistication for the contract manufacturing industry. The company's focus on component manufacturing, like camera and display modules, will improve its operational efficiency and broaden its technical capabilities.

Industry-wide diversification trends

In a parallel development, Luxshare, a China-based iPhone and AirPods manufacturer, announced its intention to acquire China-based Wingtech's ODM business in late 2024. This move is expected to help Luxshare expand beyond iPhone manufacturing into Android smartphone and feature development and manufacturing, given that Wingtech is among the top three mobile phone ODM providers.

According to IDC, Oppo and Xiaomi outsource their smartphone manufacturing to Huaqin, Longcheer, and Wingtech. Additionally, Xiaomi collaborates with Bharat FIH, Foxconn's Indian subsidiary, for its sub-brands like Redmi and Poco.

Policy implications and market dynamics

Chinese smartphone brands have captured more than 70% of the smartphone market in India. However, in recent years, the Indian government has been encouraging these Chinese vendors to increase their collaborations with local suppliers, particularly in manufacturing and distribution. Reports suggest that the government is also urging these vendors to establish joint ventures with Indian partners.

Dixon has significantly benefited from the reported policy, announcing a joint venture with Vivo and acquiring a majority stake in Ismartu India, a manufacturing unit of Transsion Holdings, a major player in the African mobile phone market.

Source: IDC, January 2025