Motorola to establish $100 million plant in India

Sufia Tippu
Thursday, 08 June 2006 19:06

IT Industry - Market

Motorola, the world’s second largest mobile handset-maker, is establishing a manufacturing facility India with an initial investment of $30 million which will rise to $100 million within a year.

When Motorola CEO Ed Zander was in India last year, he hinted that the company was planning to set up a manufacturing plant. Other senior officials also mentioned that the $37 billion telecom company was mulling plans for a manufacturing unit in India.

Now, with the blueprint finalized and the location nailed, the plant is coming to the southern port city of Chennai in Tamil Nadu. The plant will manufacture sub-$30 handsets - initially for the Indian market and later for exports.

Chennai is also the location of a Nokia handset factory. Nokia established Telecom Park last year and the location now also houses component manufacturers from Finland.

Motorola on Wednesday signed an agreement with the Tamil Nadu Government to establish the facility in the Sriperumbudur Hi-Tech Special Economic Zone, 40 km west of Chennai. The special economic zone is being jointly developed by the TN government, Motorola and component suppliers such as FoxConn, a Taiwanese company. Motorola will set up its plant on 70 acres of land within the zone.

The first phase will be ready by January next year. About 3,000 employees will be working at the facility and this expected to increase to 7,500 by the end of second phase.

According to Stu Reed, executive vice-president, Integrated Supply Chain, Motorola Inc, the facility will manufacture a variety of handsets, and begin with a production capacity of one million units a month. The company would look at exporting the products to nearby countries and to West Asia and Africa, he said.

The handsets would be for both GSM (Global System for Mobile Communications) and CDMA (Code Division Multiple Access) technologies.

Production and assembly of network base stations for products across Motorola's networks and enterprise portfolio will also be manufactured at the plant, as well as set-top boxes and network equipment.

He said that Motorola's share of the mobile handset market in India had grown from "low single digits" to "low double digits" in the last few months and he was confident that the share would increase.

Motorola, with its manufacturing unit will join the list of other handset players like Nokia, LG, Samsung, Elcoteq and XL Telecom that have set up production facilities in the country. 
 
Around 20 million handsets are expected to be produced in India this year, a figure that could go up by 50% next year, industry experts say.