Smartphone Upstart Xiaomi Brings Partner to India to Curry Local Favor

A top supplier to Xiaomi Corp. will set up a major new shop in India, as the fast-growing smartphone-maker looks to bolster its place as the top brand in the world’s second-largest market.

Holitech Technology Co. Ltd. will invest up to $200 million over the next three years on its complex that will become one of India’s first to manufacture compact camera modules, thin film transistors, capacitive touch screen modules, flexible printed circuits and fingerprint sensors, according to an announcement on Xiaomi’s blog. Production will start early next year at a massive complex that will eventually cover 75 acres in the southeastern Indian city of Tirupati.

India has become one of the biggest success stories for the recently listed Xiaomi, which unseated global leader Samsung to become the market’s top player last year. The country recently overtook the U.S. to become the world’s second-largest smartphone market in terms of units sold, banking on cheap models supplied by Xiaomi and other Chinese brands to reel in consumers.

Xiaomi was one of the earlier players to the market and now manufactures many of its smartphones locally. Last year it opened its second local production facility in the country with Taiwan contract manufacturing giant Foxconn, which is also one of Apple Inc.’s main production partners. Local governments like such plants not only for the jobs they bring directly, but also because such companies’ key suppliers like Holitech often set up supporting manufacturing facilities nearby.

“The phenomenal growth of Xiaomi along with their initiatives to promote local manufacturing has encouraged us to explore component manufacturing for Xiaomi in India,” said Holitech CEO Flame Chen. “We hope to further boost this initiative by setting an example for other component manufacturers, and being a part of Xiaomi’s growth in India.”

India has emerged as a fertile ground for Chinese smartphone-makers, who specialize in cheaper models that have proved popular in the price-sensitive market. The company passed Samsung to become the market leader last year, and widened its lead to take 30.3% of the market in this year’s first quarter, well ahead of Samsung’s 25.1%, according to IDC. After that pair, three other Chinese companies — Oppo Electronics Corp., Vivo Communication Technology Co. and Transsion Holdings — took the next three spots in the market.

Contact reporter Yang Ge (geyang@caixin.com)