NEW DELHI: Lenovo Group Ltd has commenced making smartphones in India through contract manufacturer Flex, becoming the largest Chinese company to have its mobile devices made there after the local government raised import tariffs.
Dedicated lines at Flex’s Sriperumbudur factory near Chennai will be the first time Lenovo and Motorola brands are made at the same facility, Amar Babu, chairman of Lenovo India, said in a phone interview. The brands will have separate lines with a combined annual capacity of 6 million units, Lenovo said in a statement.
Foxconn Technology Group this year began production in India of smartphones for Chinese brands including Xiaomi and OnePlus after the local government raised import tariffs to attract investment in manufacturing. Lenovo’s announcement marks the largest Chinese name yet to be lured by Prime Minister Narendra Modi’s Make in India campaign, as the competitors vie to increase their share of the world’s third-largest smartphone market.
“Output from the plants is focused mainly on serving the Indian market,” Babu said. Lenovo has no immediate plans to design and develop phones specifically for India, he said.
Lenovo had considered adding smartphone manufacturing to its own PC factory in Puducherry on the nation’s southeast coast before deciding to outsource to Flex’s existing factory, Babu said.
Indian production of its Moto E smartphone has already started.
China slowdown
The Flex campus has 1,500 workers dedicated to Lenovo production and also includes quality assurance and testing, he said, declining to say how much his own company spent on equipment installed at the plant. Lenovo isn’t currently considering outsourcing to Foxconn in India, he said.
China, which accounted for 59% of Lenovo’s phone shipments in the 12 months through March, experienced its first quarterly decline in smartphone unit sales in six years in the first quarter, according to International Data Corp. Lenovo, and combined Lenovo-Motorola, lost share in China in the period, IDC said in May.
In contrast, demand for smartphones in South Asia’s largest economy is surging, with shipments climbing 44% in the second quarter to 26.5 million units, IDC data shows. Chinese vendors have tripled shipments in India from a year earlier with Lenovo, Xiaomi, Huawei and Gionee alone doubling their combined market share to 12%, according to IDC.
“As China started to slow down, most vendors from the country have targeted India as the next big growth market for smartphones,” Kiranjeet Kaur, research manager with IDC’s Asia-Pacific mobile phone team, wrote on 11 August.
Foxconn, the world’s largest custom electronics manufacturer including for Apple Inc., has announced plans to set up as many as 12 factories in India.
