Does SMT Mo­bile man­u­fac­tur­ing make sense for all in In­dia

The big­gest chal­lenge is to have sus­tain­able and con­sis­tent de­mand to reap ben­e­fits of man­u­fac­tur­ing by run­ning op­er­a­tions at op­ti­mal lev­els.

PCQuest - - CONTENTS -

Emo­tions apart, busi­ness is all about ra­tio­nale think­ing and de­ci­sion mak­ing. As In­dia ush­ers into CKD or Com­plete Knock-Down man­u­fac­tur­ing, the ini­tial trends and mar­ket pulse is a bag of mixed re­ac­tions.

Early signs as sug­gested by do­mes­tic man­u­fac­tur­ing pre­lim­i­nary es­ti­mates of Smart­phones for 2Q (April-Jun) ver­sus 1Q ( Jan-Mar) 2018, it con­cludes there is a strong pos­i­tive cor­re­la­tion be­tween the vol­umes and the sta­bil­ity in the op­er­a­tions of man­u­fac­tur­ing. This is a very ba­sic eco­nomic fun­da­men­tal and does not need to be sub­stan­ti­ated with data.

Nev­er­the­less, the data es­ti­mates sug­gest that either one has to be a very large OEM, some­one like Sam­sung or it has to be a con­tract man­u­fac­tur­ing model, wherein a third-party man­u­fac­turer pro­duces for var­i­ous brands on dif­fer­ent assem­bly lines. In man­u­fac­tur­ing, one may not achieve a straight ideal curve of vol­umes and fluc­tu­a­tions are bound to oc­cur. How­ever, those have to be in per­mis­si­ble range. Else, the un­pre­dictabil­ity of the mar­ket af­fect­ing de­mand is go­ing to cause tur­bu­lent waves in the pro­duc­tion vol­umes as well. This can be seen as has hap­pened in the case of Vivo and Oppo in pos­i­tive terms and In­dian brands of Lava, Mi­cro­max and In­tex in the op­po­site direction.

Well it is now too late, as brands like Lava, Mi­cro­max and In­tex have al­ready in­vested in their SMT lines, but, an al­ter­na­tive could have been if they had col­lab­o­rated by cre­at­ing a com­mon man­u­fac­tur­ing fa­cil­ity. That would have served much akin to con­tract man­u­fac­tur­ing model. This is where com­pe­ti­tion drives col­lab­o­ra­tion.

For SMT scale is crit­i­cal to make it suc­cess­ful and with mar­ket be­com­ing un­pre­dictable as op­er­a­tors – in­cum­bents as well as the chal­lenger – are try­ing to align their busi­ness op­er­a­tions caus­ing dis­rup­tions, de­mand as­sess­ment is go­ing to be tricky for hand­set mak­ers ir­re­spec­tive of their clas­si­fi­ca­tion, be it Global, Chi­nese or In­dian. There is still some scope left for brands to re­jig their man­u­fac­tur­ing strat­egy and align it with the mar­ket con­di­tions. Else, they may have to go back to CBU (Com­plete Built Units) route im­port­ing hand­sets as per mar­ket move­ments. This may save the brands from erod­ing fur­ther, but def­i­nitely not a good sign for Make in in­dia.

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