Three in five laptops to be made in India, aiming to be No.2 brand: Acer’s Kohli

The push for local manufacturing is in line with Acer looking to broaden its presence in the Indian consumer market, where it has also started looking at new product categories such as television and home appliances.

“Currently, all of our desktop PCs (personal computers) sold are made locally at plants operated by our ODM (original design manufacturer) partners. We’ve also sold 2.3 million tablets in the past year, all of which were made in India. At this moment, about 40% of all our laptops are locally made—we aim to ramp this up to 60% of all laptops per year, by the end of 2024," Kohli told Mint in an interview.

The company is looking to displace American technology major Dell as India’s second-largest PC brand.

“The last year was strong for us, and we’re looking to build on this further with a strong 2024 as well. This will see us compete against Dell, which is currently ranked second in the market. We’re definitely looking to grow faster, and move up in the market," he added.

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Acer’s move is in line with India’s PLI Scheme 2.0 for IT Hardware—where laptops and computing device assembling in domestic plants were incentivized by the Centre as part of a production-linked incentive scheme. On 18 November, Union IT minister Ashwini Vaishnaw said that the net production value of all ‘IT hardware’ will be $42 billion—with companies investing $360 million as part of local manufacturing initiatives.

Kohli also said that its manufacturing targets for the PLI scheme were met along with its partners. The company has increased its domestic market share over the past two years. In the March quarter of 2022, Acer accounted for 9.8% of total PCs (desktops, laptops and tablets) sold in the period, and was the fourth-largest brand in the country after HP, Dell and Lenovo, as per market researcher IDC India. Last year, a 30% sales slump driven by work-from-office orders after the pandemic ended saw Acer’s local PC sales in the first three months of 2023 drop 12.5%.

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However, Acer’s sales decline was half of the rest of the top five brands, which saw a fall of 25-50%. This year, Acer was the fastest recovering brand in the top five companies. PC sales in January-March jumped 29% year-over-year to 474,000 units, overtaking China’s Lenovo to become the third-largest laptop and tablet seller in the country.

While Acer India’s FY24 financials are awaited, data from the Registrar of Companies (RoC) showed that Acer reported a net operating income of ₹4,100.8 crore ($488.4 million) in FY23, up 3.1% over FY22’s ₹3,976.3 crore ($484.9 million). Net profit increased 13.8% to ₹27.9 crore ($3.3 million).

Kohli expressed optimism in the company’s prospects in India, going forward. “We’re diversifying into home appliances with a wholly owned sub-brand. While our smartphone brand licensing is a completely separate operation, we expect much of our growth to still come from an increase in the consumer business. In 2022, 64% of our PC sales were to enterprises. By December 2024, we hope to strike a 50:50 balance given the journey that we’re on to focus on the consumer market," Kohli said.

However, market analysts are not convinced. An investor note by financial services firm Icra Ltd said that Acer India’s profit margin—a measly 0.7%—remains a challenge. “The industry is characterized by an intense price-based competition among players. This limits the pricing flexibility across the industry, resulting in thin margins. Moreover, the computer market is very competitive, and Acer India generally prices its products below its competitors. This is due to the intense competition in the desktop and laptop market, which has kept a tight control over product pricing. Still, the margins are especially low for tender-based government-sector orders," Icra’s note said.

The company’s government contracts also saw it foray into the education sector. “We addressed the demand for computing devices and interactive flat panel displays in smart classrooms and in rural markets, where a device was needed within ₹15,000. Given that no laptop could serve this market, we supplied over 2 million tablets, all of which were made in India," Kohli said.

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To be sure, electronics manufacturing plants in India still work largely as assembling units—with crucial components such as the semiconductor chip, memory, storage, battery cells and various other core parts still being imported.

Kohli said that the company is “happy" with the level of sophistication and progress that the domestic manufacturing ecosystem has made over the past years. “We’ve brought along various inputs from the Taiwan headquarters in terms of improving production mechanisms and ramping up the local component supply chain. Most of our local manufacturing partners, which include Dixon Technologies, Bhagwati Products and Plumage Technologies, have consistently upgraded and ramped up India’s manufacturing plants, which has allowed us to localize more of our product lines," he added.