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Date: 13-08-15

Foxconn, a big entry in India-electronics manufacturing by Taiwan industry

In Taiwan's economy, Electronics is strategic and has around 30% share in the overall GDP. Taiwan strategically moved over to electronics manufacturing as key focus area in 1960s. The electronic industry in Taiwan highly dependent on exports. Domestic consumption of electronics is not big enough to support Taiwan's electronics industry.

Before the rise of China in electronics manufacturing, Taiwan had a huge share in some of the area such as personal computers and laptops/notebook. Taiwan leveraged China manufacturing opportunity wisely by investing in China very early. Though it was a win-win idea, China-based companies took away the market-share held by Taiwan's electronic companies in some of the areas. Very good example is Lenovo in the PC market. Chinese companies have lot more higher market-share in the smart phone market and also flat panel television market. In semiconductor memory manufacturing, Taiwanese companies not keeping up any technology edge compared to Samsung, Toshiba and such companies. In DRAM, SRAM and Flash memory, Taiwanese companies are losing share to top four players in that market.

However in the semiconductor foundry business, World's biggest semiconductor foundry TSMC, based out of Taiwan is increasing its share continuously. But China-based chip foundries are catching up faster. Now you have SMIC, a number one IC foundry in China making 28 nm chips. Over the time there are high chances, that the semiconductor companies in China may overtake Taiwan-based semiconductor companies.

So finally China-investment is turning out to be less beneficial to Taiwanese electronics industry, including the factor of rising cost of wages in China.

Though India is a tough to crack market for many Asian companies, Taiwanese companies could generate lot more revenue in the areas they are focusing, compared to their competitors from other regions including US. For example, in industrial embedded computer market, Taiwanese companies such as Advantech have higher market share compared to other world's leading electronic companies in this area. Embedded computer market requires lot of design capabilities along with manufacturing. Delta Electronics is one more such good example of successful Taiwanese company in India. Other big players such as Acer, Benq and many more are doing well in Indian market. A big chunk of smart phones sold in India are powered by smart phone chips designed by Taiwan-based Mediatek, which are fabricated by TSMC.

Now, India has put a red carpet to electronic companies around the world to make their products in India and participate in "Digital India" and "Make In India" campaign.

Taiwanese companies looks to have realised the potential of growth by investing in India and start riding this bus of growth early-on than the others in the market.

To start with, they are carefully investing into electronic manufacturing in India where they start with assembling electronic products from the components imported from Taiwan and other places, rather than fabricating electronic components here in India. The first big entry in manufacturing by a Taiwanese companies is Foxconn, the world's best-known precision electronics product assembler. By seeing the huge demand of electronics consumption forecasted for India, there is hardly any strong factor which can be found as a negative one for the growth of Foxconn in India, and that's the reason why Foxconn is strategically planning to invest in most of the electronic manufacturing clusters coming up in India.

The first customer for Foxconn announced officially is China's Xiaomi, a fast-growing smartphone brand in India. And India's largest selling mobile phone brand Micromax is also another potential customer for Foxconn, as per some of the reported stories on this subject.

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