Indian EMS industry is quite optimistic will waves of “Make in India” and its impact so far. Year 2016 is promising for EMS industry not only by the existing business prospects but there are many new applications areas knocking EMS companies’ doors to unlock the potential. Here is an exclusive study by EM Media focusing some of the key targets for the EMS industry in year 2016 Here we go …
As stated new application areas are open for Indian EMS industry in year 2016. The most prominent ones in Indian business scenario are, LED Assembly, Mobile card Assembly, Automotive and Medical. We have done an in-depth survey of these segments and talked to industry giants. An exclusive report is here:
LED Assembly
Diversified Applications + Trending consumers = Bright Future
In 2016, manufacturers will continue to face cost cutting solutions. Besides lowering LED chip prices, manufacturers will start to evaluate whether LED driver and other component prices can be further lowered. Manufacturers aim to reach a cost reducing solution through the overall system design. LED lighting manufacturers are seeking to raise their market shares through low pricing strategies to expand sales and revenue. So, LED light sources to replace traditional lighting products market shares, which will increase in the next three years. Due to currency fluctuations in 2015, end market demands in several countries have been much lower. LED prices have also continued to slide in 2015. Many SMEs in the LED industry are facing financial losses, and sinking into negative cash flow cycles. These developments have ousted many smaller manufacturers. Chinese LED companies have been acquiring international companies to transform their business models. This trend will continue. Some of them are targeting major international LED players’ patents and lighting brands, hoping to strengthen their patent portfolio and oversea distribution channels. Apart from that, these manufacturers are also transforming their business models. Some of them aim to enter other market sectors through mergers and acquisitions. Although LED companies are able to raise retail prices for smart LED lighting products, sales have fallen below and the issue is whether smart lighting products with added value can meet consumer demands. Most smart lighting products with added value have been remotely controlling lighting devices. They have features like dimming and color tuning, but despite added features, most consumers are unwilling to pay extra cost for these product features, which will impact smart lighting sector’s overall supply chain ecosystem, and requires long term observations.
Mobile Card Assembly
India is largest consumer of mobile phones.
Fortunately the largest consumer and un-fortunately the largest importer of mobile phones, tablets etc Indian market offers great unexplored opportunity to the companies in mobile phone assembly and manufacturing. But is it hasn’t been as simple as it seems. Mobile phones are becoming smarter over the top and so the technology. Mobile phone sector needs foreign investment in finance as well as technology to cater competition from Chinese makers. Luckily year 2016 will witness major projects and ventures in this field and EMS industry will some international banners manufacturing in India.
Three of India’s top home-bred mobile handset makers have agreed to invest a total of Rs 750 crore in setting up manufacturing facilities at the hardware hub being developed by the Andhra Pradesh government near temple town Tirupati. The companies—Micromax, Karbonn and Celkon—signed agreements with the state government on Tuesday to set up their units at the industrial park coming up near Renigunta airport on the outskirts of Tirupati. This comes about two months after Taiwan-headquartered Foxconn, the world’s largest contract mobile handset maker, decided to set up a manufacturing plant in Andhra Pradesh, a state that has been aggressively trying to woo foreign as well as domestic investors. Chinese handset-manufacturer Vivo recently announced its new manufacturing plant in Noida will be operational in 3-4 months. “Our 3 lakh square feet Noida facility will start operations in three-to-four months and by the end of the year will look at hiring 2,000 people. Our plant will have the ability to produce one million handsets by the end of next year,” Jerome Chen, deputy general manager at Vivo India, said. Chen also said that the company would be investing Rs.125 crore by the end of the year in India.
Gionee India has revealed that the firm is planning to launch a manufacturing unit in India by March, 2016. In addition, the company has announced that the Indian assembled devices will be exclusively sold out in the country. Contributing to the announcement, Gionee India Country CEO and MD Arvind R Vohra said in a statement, “By March, 2016 we expect to assemble all phones that will be sold in India at two outsourced locations in the country. So, we will be selling all ‘Made in India’ phones in India”. For the company’s ‘Make in India’ initiative, it has partnered Dixon Technologies and Foxconn for the smartphone manufacturing in the country, with an investment of over Rs 300 crore for next three years.
Optiemus Infracom, the founders of domestic mobile brand Zen Mobile, recently signed a joint venture with Taiwan-based OEM Wistron Corporation to set up mobile manufacturing unit in Noida. The joint venture, in which Optiemus Infracom owns a majority stake, will bring investments of around $200 million and will create over 15,000 jobs over the next five years, the company claimed. Going forward in the next two years, the joint venture aims to expand the facility into an industrial park with an installed capacity of 100 million SMT and mobile devices per year.
Automotive applications
Asia will be the biggest car manufacturer worldwide within the next few years, but Europe will continue to lead in research and development. The manufacturers believe that growth in the emerging markets will continue to be the key driver for increased revenue over the next ten years. European car makers will continue to lead the way in research and development, complemented with innovation from the North American based tech industry. Improvements to health and safety, alternative fuel use, and self-driving cars are at the forefront of automotive R&D. The ability to have the correct data at the right time and place will become significantly more important in managing the manufacturing cycle around the world. IFS is developing training schemes for the Chinese market using local teams to ensure services are delivered effectively to local teams. Local teams are vital on the ground as they help to manage the cultural and regulatory variations within each country. Beside lightweight construction and engine optimization, low-cost vehicles will increase the cost pressure on the automotive industry. It is common for multiple car brands and models to operate on the same platforms. This is set to become more common since it is an effective way of reducing costs in an increasingly global and competitive market. As per SIAM, (Society of Indian Automobile Manufacturers) The Indian industry produced a total of 23,366,246 vehicles including passenger vehicles, commercial vehicles, three wheelers and two wheelers in April-March 2015 as against 21,500,165 in April-March 2014, registering a growth of 8.68 percent over the same period last year. The sales of Passenger Vehicles grew by 3.90 percent in April-March 2015 over the same period last year. Within the Passenger Vehicles segment, Passenger Cars and Utility Vehicles grew by 4.99 percent and 5.30 percent respectively, while Vans declined by (-) 10.19 percent in April-March 2015 over the same period last year. The overall Commercial Vehicles segment registered a de-growth of (-) 2.83 percent in April-March 2015 as compared to same period last year. Medium & Heavy Commercial Vehicles (M&HCVs) grew by 16.02 percent and Light Commercial Vehicles declined by (-) 11.57 percent. Three Wheelers sales grew by 10.80 percent in April-March 2015 over the same period last year. Passenger Carriers and Goods Carriers grew by 12.16 percent and 5.27 percent respectively in April-March 2015 over April-March 2014. Two Wheelers sales registered growth of 8.09 percent in April-March 2015 over April-March 2014. Within the Two Wheelers segment, Scooters, Motorcycles and Mopeds grew by 25.06 percent, 2.50 percent and 4.51 percent respectively in April-March 2015 over April-March 2014. In April-March 2015, overall automobile exports grew by 14.89 percent over the same period last year. Passenger Vehicles, Commercial Vehicles, Three Wheelers and Two Wheelers grew by 4.42 percent, 11.33 percent, 15.44 percent and 17.93 percent respectively during April-March 2015 over the same period last year.
Medical applications
Indian medical device industry can grow to $7 billion by 2016: USIBC
The Indian Medical Electronics industry is currently valued at around USD 1 billion and has been growing at an average rate of 17% for past couple of years. It is strongly believed that growth will outperform the pace, resulting in the Indian Medical Electronics market reaching close to USD ~6.5 billion by the year 2020. Various sources expect the Medical Electronics industry to reach around USD 2+ Billion in 2015 growing at a CAGR of 17% for the last five years from a size of USD 850+ Million in 2009. It is believed that the growth will not only sustain but increase beyond 17%. The hypothesis is based on positive market and non-market factors as listed below:
- Market Factors: Growing population, ageing, income base and associated disposable income, increasing socio-economic inclusion of rural and deprived in mainstream economy, heightened manufacturing innovation to create customized products to meet the needs of all income segments, changing disease prevalence pattern (e.g. early onset of diabetes and heart diseases) and growing awareness among the middle class to focus on early detection and disease prevention.
- Non-Market Factors: Development of infrastructure, favorable regulations, FDI inflow, outsourcing of manufacturing and R&D activities to India, government, initiatives to improve healthcare access through, insurance schemes such as RSBY (Rashtriya Swasthya Bima Yojana), Aarogyasri, etc.
The US-India Business Council (USIBC) delegates recently visited the country and stressed that there is a need for a separate regulatory framework for medical devices. The business body that led a three-day Medical Device Trade Mission to New Delhi and Gandhinagar from July 21 to July 23 said there are opportunities for collaboration to attract investment and talent to the sector. The Indian medical device industry is currently valued at $4.4 billion, the fourth largest in Asia and the sector has the potential to grow to USD seven billion by 2016 with a growth rate of 10 15 per cent annually, it said. Citing the NDA government’s focus on ‘Make in India’, the USIBC delegation said India had strong potential in developing innovative industries in the medical devices sector.
“Through this series of fruitful discussions, we have identified opportunities to continue collaborating with the Government of India in support of its priorities to attract investment and talent to the medical device sector,” said Maulik Nanavaty, Senior Vice President and President for Neuromodulation at Boston Scientific. “India has made considerable strides in developing innovative industries across a number of sectors and maintains strong potential to do the same in medical devices,” Nanavaty, who chaired the delegation, said.
Ms. Ashita Gupta – Chief Operating Officer, Smile Electronics Ltd.
LED Assembly: USD 6 mil (in 2015), USD 10 mil (Expected in 2016)
Mobile card assembly: USD 6 mil (in 2015), USD 8 mil (Expected in 2016)
Automotive applications: USD 4 mil (in 2015), USD 6 mil (Expected in 2016)
Medical applications: USD 5.5 mil (in 2015), USD 9 mil (Expected in 2016)
Mr. Srikanth V.S – Chief Executive, S.B.Technologies
LED Assembly: USD 3 mil (in 2015), USD 8 mil (Expected in 2016)
Mobile card assembly: not in mobile application
Automotive applications: USD 9 mil (in 2015), USD 15 mil (Expected in 2016)
Medical applications: USD 7 mil (in 2015), USD 8 mil (Expected in 2016)
Anoop Mehrotra – Country Manager, Jabil Circuit India Pvt Ltd
LED Assembly: INR 25 – 50 Crores (Expected in 2016)
Mobile card assembly: not in mobile application
Automotive applications: INR 10 – 15 Crores (Expected in 2016)
Medical applications: not in medical application
