FIH Mobile targets India as Chinese clients like Xiaomi hit by smartphone slowdown at home also shift to subcontinent
Electronics contract manufacturer says it is eyeing markets that will become the next growth driver; wants to develop a services ecosystem
Electronics contract manufacturer FIH Mobile, the top assembler of smartphones for China’s Xiaomi, is targeting strategic new investments and alliances in India amid the continued slowdown in mainland China.
“The group has been actively exploring good investment opportunities,” FIH chairman Tong Wen-hsin said at the company’s filing with the Hong Kong stock exchange on Wednesday.
“Since 2015, the group has been expanding its local manufacturing service and component supply chain support in non-China emerging markets like India, which are expected to become the next growth driver.”
Tong added that FIH, part of the Foxconn group of companies under Taiwan’s Hon Hai Precision Industry, was also keen to “develop an ecosystem for services in India and other emerging markets”.
That strategy has already led FIH to invest US$200 million for a minority stake in major Indian online shopping site Snapdeal last year.
The company’s market outlook closely aligns with that of major customer Xiaomi, the high-flying technology start-up and the world’s fifth-largest supplier of smartphones.
“We need to consolidate the Chinese market and be more focused on the India market under our global strategy,” Xiaomi founder, chairman and chief executive Lei Jun said in a press conference in Beijing last week.
Beset by slow growth in their home market, Chinese mobile phone suppliers have ramped up expansion in India as the country’s appetite for advanced, low-cost smartphones continues to develop.
India is the fastest-growing and second-largest smartphone market in the world, according to market research firm Counterpoint Technology.
“During 2015, Indian smartphone shipments grew 23 per cent year-on-year to cross the 100 million units milestone,” Counterpoint Technology senior analyst Tarun Pathak said in a report.
It is a growth trend that will likely augur well for FIH, which is also a contract smartphone supplier to China’s Huawei Technologies, Oppo Electronics and Meizu Technology, in which e-commerce giant Alibaba Group has a minority stake.
Tong said FIH has benefited from increased smartphone production outsourcing, especially by Chinese brands that are aggressively expanding outside their home market.
FIH reported that its net profit last year rose 35 per cent to US$229.07 million, up from US$169.44 million in 2014, on the back of a high net margin, strong control of operating expenses and restructuring of manufacturing sites.
Total revenue increased 9 per cent to US$7.45 billion from US$6.83 billion in 2014.
Ken Hui, equity analyst at Jefferies, said on Wednesday that Huawei would be “another key growth driver for FIH” this year, apart from India.
Huawei was the world’s third-biggest smartphone supplier last year, according to IDC.
“FIH will expand share within Huawei for both assembly and [handset] casings as the customer continues to shift focus to high-end smartphones,” Hui said.