Consumer electronics manufacturers expand horizons, leverage govt incentives

Leading consumer electronics contract manufacturers, who are now venturing into component manufacturing, and automotive part manufacturers are looking to diversify beyond their core. Thanks to government incentives and the need for maximum utilization of capacities. Chief executives of consumer electronics manufacturers like Dixon Technologies, Amber and Epack Durables said they will venture into the automotive industry with products like automotive displays, printed circuit board (PCB) and printed circuit board assembly (PCBA). It also found a mention at the investor calls in the past few days.

Similarly, auto component manufacturers like Lumax Industries, Uno Minda and Hella India Automotive have just been selected in the government’s third round of white goods production linked incentive (PLI) scheme where they will be producing components for LED lights.

Dixon Technologies managing director Atul Lall told analysts the company wants to enter automotive display for which it is in talks for collaboration. This will be rolled out from the display fab which the company wants to set up at an outlay of $2.7-3 billion.

India’s largest contract AC manufacturer Amber Enterprises chief executive officer Jasbir Singh said the company is supplying PCB applications and assembly boards for four and two wheeler industries. “So, there is a cross deployment of customers in botḥ, PCBA and PCB. And I believe we will be able to do that,” he told analysts.

To be sure, there are several components such as LED light and its sub components, PCB and PCBA, displays, sensors, BLDC motors, battery cells and semiconductors which are used in both electronic products and automobiles driving this diversification with both the industries heavily localizing.“The two industries, electronics and automobiles, are using parts and components that are common to both,” said Hemal Thakkar, director at Crisil Intelligence. “Both being sunrise sectors, the initial volumes will be low. Hence it makes sense to have a diversified customer base,” he said.Appliance contract manufacturer, Epack Durable managing director Ajay DD Singhania said the company would tap automotive clients for the PCBA component since it has some spare capacity after captive consumption and supplying to other electronic companies. “It would help to justify the investment to set up these lines especially when for seasonal products like AC the capacity utilization is not always high,” he said.

Most of the large electronic contract manufacturers have already started the path of component production, including sub-assemblies of the parts of the component. Even automotive part suppliers are venturing into this segment. Even the government is likely to soon announce a PLI scheme for electronic components.

Sunil Bohra, chief financial officer at Uno Minda confirmed the company has got an approval as part of the PLI for white goods. “We have made a Rs 20 crore investment. The participation in the scheme will help us to build scale and become self-reliant for parts that one would have typically imported,” he said.

As per government documents, Uno Minda intends to manufacture twelve LED light components such as LED drivers, PCBs, LED modules and LED chips, while Lumax will invest Rs 60 crore and Hella India another Rs 18 crore whereby both will produce LED drivers.

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