- Dixon will hold a 51% stake in the joint venture, enabling Vivo to strengthen its smartphone manufacturing and assembly operations in India.
- The partnership is believed to benefit both companies, with Dixon gaining higher manufacturing volumes and Vivo improving its production efficiency in India.
- Dixon can continue manufacturing smartphones for other OEMs under the agreement, with separate facilities for Vivo production.
Vivo Partners with Dixon in India
Vivo has entered into a joint venture with Dixon in India, with a majority stake of 51% held by Dixon and the remaining 49% by Vivo. This structure gives Vivo an advantage in manufacturing and assembling smartphones in India, which was previously somewhat hampered by the government’s preference for an Indian stakeholder to hold the majority stake in the assembling business. With Dixon holding 51%, this challenge appears to have been addressed.
Benefits for Both Vivo and Dixon
The partnership is believed to benefit both companies.
For Dixon, the advantage is straightforward. Vivo is the number one smartphone player in India in terms of shipments, which means Dixon is likely to receive significant manufacturing volumes every quarter.
For Vivo, the joint venture strengthens its manufacturing footprint in one of the world’s most important smartphone production hubs. India has become an attractive destination for smartphone assembly due to its relatively low tariffs. With the recent exemption of tariffs on certain components, manufacturing in India becomes even more lucrative, helping Vivo optimize its production costs.
However, we believe these cost benefits are unlikely to fully offset the ongoing increase in memory prices, which continues to remain a key cost pressure for the smartphone industry.
Can Dixon Manufacture Smartphones for Other Brands?
An important question is whether Dixon can continue manufacturing smartphones for other smartphone OEMs after entering into this joint venture with Vivo.
The answer is yes.
Since Dixon holds the majority 51% stake, it is allowed to manufacture smartphones for other smartphone OEMs as well, and this forms part of the joint venture agreement. However, the manufacturing facilities used for Vivo smartphones will remain separate from those used for other brands.
This arrangement creates a win-win situation for Dixon, allowing it to leverage the partnership with Vivo while continuing to serve other customers.
A Positive Development for India
Beyond the benefits for Vivo and Dixon, the joint venture is also a positive development for India.
The partnership is expected to generate employment for a large number of people, contribute to the country’s economic growth, and further strengthen India’s position as a global smartphone manufacturing hub. As smartphone production continues to expand, such collaborations are likely to play an important role in making India’s manufacturing ecosystem even bigger and more competitive.