DIXON

,

SYRMA

Stay Cautious Amid Rising Costs

India’s electronics manufacturing services (EMS) firms are adopting a wait-and-watch approach as the West Asia conflict disrupts global supply chains and pushes commodity prices higher. While companies like

and are not immediately factoring in disruptions, executives acknowledge that the next few quarters will be critical for demand, margins, and shareholder returns. • Dixon Technologies: • Chairman said industry bodies are assessing how long it will take for destroyed capacities of commodities and components to recover. • Gas supply chain disruption unlikely to affect Dixon directly, but could hit air-conditioner makers. • Rising component costs may be passed on to clients, potentially impacting demand. • Syrma SGS: • CEO noted that March quarter margins remain insulated. • Cost adjustments are ongoing, with pass-through clauses balancing vendor and customer interests. • Clarity expected in three months; turnover discounts from long-term partners may offset cost increases. Sector Growth & Returns • EMS sector revenue: ₹11.3 trillion in FY25, up from ₹1.9 trillion in FY15, growing at 19.5% CAGR. • Outperformed Sensex returns: EMS delivered double the shareholder returns over the past decade. • Electronics exports: $22.2 billion in FY25, second-highest sector for India. Government & Industry View • IT minister Ashwini Vaishnaw: localization of components is a continuous process, no special priority due to war. • Industry consensus: no immediate impact on semiconductors, passive components, mobile manufacturing, or IT hardware. • Analysts estimate $2–3 billion export impact from reduced mobile shipments to West Asia, but broader EMS firms remain insulated in the near term due to inventory buffers and long-term contracts. Outlook Short-term risks include rising input costs and export disruptions, but EMS firms remain resilient thanks to inventory cover, pass-through mechanisms, and strong domestic demand.