Nokia is doubling its factory space in Chennai as half the mobile phones manufactured by the phone giant there are headed for export markets where demand is booming, said Jukka Lehtela, outgoing head of manufacturing, Nokia India.
The manufacturing plant, located in Sriperumbudur, Chennai, which reached a shipment volume of 25 million handsets in December last year, is all set to expand its floor space from 30,000sq. m to 53,000 sq. m to meet the export demand, said Lehtela.
Meanwhile, with eight component manufacturers moving into the Nokia Special Economic Zone by mid-2007, the lead-time for component delivery will be cut down by seven days, allowing the factory to ramp up production and meet demand from the Indian, West Asian and Southeast Asian markets, said Lehtela.
In 2006, about 20% of the handsets produced in the facility were exported to nine countries in Southeast Asia and eight countries in West Asia. Despite the fact the company has manufacturing facilities in China and Southeast Asia, the Indian facility also acts as a producer of high-volume phones.
The facility manufactures about 10 Nokia models, all of which are in the low-cost segment. In 2007, four of these models will be phased out, and seven new models will now be added to the portfolio.
“It seems to be an ideal formula to set up operations to address the local market, and then, once it becomes bigger, to use it as a cost-effective base to supply to surrounding markets such as West Asia and Southeast Asia,” said Diptarup Chakraborti, principal analyst at Gartner India.
Chakraborti said he expects other manufacturers, such as Sony Ericsson, who announced their manufacturing plans in India earlier this year, to follow the same route.
Asked if Nokia would consider manufacturing through third parties in India, Lehtela said the capabilities are not quite there yet, though he said that could happen soon.
The company does outsource a small portion of its phones globally to manufacturers Foxconn and Elcoteq, both of which have a presence in India.
The company announced the appointment of former LG Electronics executive, Sachin Saxena, as its new director of India operations for the Chennai manufacturing facility, replacing Lehtela, who goes back to Nokia’s headquarters in Finland.