Dixon targets global EMS top 10 as it expands beyond smartphone assembly
Dixon Technologies is diversifying into components, servers, optical equipment and defence manufacturing, with a second IT-hardware plant due to open in late November. The company aims to enter the global top 10 EMS players within five years and top five within a decade.
What happened
Dixon Technologies plans to diversify beyond smartphone assembly into components, servers, optical equipment and defence manufacturing. The Indian contract
Key facts
- Top 10 global EMS ranking targeted within five years
- Top 5 global EMS ranking targeted within 10 years
- Smartphone manufacturing contributes more than 90% of revenue
- Share price is down 28% over the past year
- India imports nearly $15 billion of IT hardware
- Dixon listed in Mumbai in 2017
- Second IT-hardware plant planned to open in late November
Why this matters
Dixon’s expansion creates partnership, acquisition and customer-win opportunities across IT hardware, optical equipment and defence, as it seeks the scale and capabilities needed to compete with global EMS leaders.
What to watch
- Opening and utilization ramp of the second IT-hardware plant in late November.
- Share of revenue from non-smartphone categories and component manufacturing.
- Announcements of server, telecom, optical-equipment or defence OEM customer wins.
- Capex, debt, working-capital days and operating-margin trends during the diversification period.
- Government incentive approvals, localization mandates and import-duty changes affecting IT hardware and electronics components.
- Evidence that smartphone revenue concentration falls materially from above 90%.
- Secure anchor OEM contracts for servers, networking, optical and laptop/IT hardware before major capacity ramps.
- Expand component localization through joint ventures or acquisitions in PCBs, displays, camera modules, mechanics and power electronics.
- Recruit specialist engineering, quality and program-management talent for defence, telecom and data-centre equipment.
- Increase automation, traceability and supplier-development spending to meet global OEM qualification standards.
- Use long-term customer commitments to support capex financing and protect utilization rates.