Xiaomi Partners With Foxconn to Build Smartphones in India

With high demand for phones in India, Xiaomi wants to take the manufacturing process there as well as create easier market access.

Xiaomi, smartphones, India, mobile phones, Samsung, Apple, LG, Lenovo

Chinese smartphone maker Xiaomi is partnering with Taiwan's Foxconn to try to carve out a bigger piece of the huge consumer handset market in India by assembling phones there to cut costs and simplify distribution.

The devices will be assembled in a factory in the southern state of Andhra Pradesh, according to an Aug. 10 story by Reuters. "India is the world's fastest growing smartphone market, but so far a lack of good suppliers and infrastructure have hampered efforts to manufacture phones in the country, forcing most of India's more than 100 different phone companies to import from China and Taiwan," the story reported.

Starting immediately, Xiaomi's first locally made smartphone, the Redmi2 Prime, rolled off the assembly line, the story said. The budget handset sells locally for about $109.58. Xiaomi entered the market in India in July 2014 and has become the second-largest player for phones in the country.

Manu Jain, who heads Xiaomi's India unit, told Reuters that the local factory will help cut taxes, will help manage inventory and will reduce phone production lead times from three to four weeks to under two weeks. "Over time, most Xiaomi phones sold in India will be made in India," he told Reuters. There were about 140 million smartphone users in India in 2014 and that number is expected to grow to 651 million by 2019, according to a study by Cisco.

Foxconn previously has had assembly plants in India, the story reported.

Earlier in August, reports circulated that Xiaomi wants to start making its own ARM-based chips, according to a previous eWEEK story. Xiaomi apparently wants to join the ranks of Apple, Huawei Technologies and Samsung as another smartphone maker that builds its own custom-designed processors rather than buying chips from Qualcomm or MediaTek. The company has gathered the necessary ARM licenses and plans to begin designing them next year.

The move to designing and manufacturing its own chips could give Xiaomi greater control over its smartphone designs and reduce their costs. The company's current Android devices are powered by Qualcomm Snapdragon processors.

During a conference call with analysts and journalists to discuss quarterly financial numbers, ARM executives last month indicated that the company had entered into a licensing deal with a major Chinese OEM for making mobile phone chips, but did not identify who the device maker was.

The move to make chips is part of a larger push by Xiaomi to expand its capabilities and reach in the booming and highly competitive smartphone market that includes such major players as Apple, Samsung, Lenovo, Huawei and LG Electronics. In the first quarter, vendors sold 336 million smartphones, a year-to-year increase of 19.3 percent, according to Gartner analysts.

In December 2014, Xiaomi brought in another $1.1 billion in investment funding as it continued to grow to take on more established competitors around the world, according to an earlier eWEEK report. The 5-year-old company is valued at some $45 billion. Xiaomi is on a path of rapid growth as it offers low-priced phones in China and other developing markets. The company doesn't build its own devices, but instead uses contract manufacturers to build its products.