Dixon signs 60-40 Gemtek venture to make optical parts in India
Dixon Technologies builds TVs, phones, lights and other electronics for well-known brands that sell them under their own names. On 7 October 2026 it signed a joint venture agreement with Taiwan's Gemtek Technology to make optical transceivers and related telecom parts in India through Dixon Electroconnect . The move adds a data-centre and telecom optical line to Dixon's fast-growing telecom business, but the deal still needs closing conditions and is due by 3 February 2027 .
Signed pact creates 60-40 optical venture for India
New unit will build fibre-optic modules for telecom and data centres
Dixon Electroconnect will manufacture and supply Optical Transceiver-SFP and BOSA, plus other telecom products the parties agree on from time to time, in India . SFP is a small plug-in module that converts electrical signals to light for fibre networks, and BOSA is the sub-part inside that sends and receives the light.
The pact follows a binding term sheet signed on 9 June 2026 . The filing describes the deal as domestic . Management says the venture under its approved ECMS application will allow it to capture a share of growing demand in the telecom and data center segments . ECMS is the government scheme to support electronic component manufacturing in India.
The filing positions the venture as an entry into the data centre, telecom and optical-connectivity ecosystem . It pairs Dixon's large-scale manufacturing with Gemtek's expertise in high-speed optical modules, telecom infrastructure and networking technologies . The demand cited is from artificial intelligence, cloud and edge computing, hyperscale data centres, high-speed networking and next-generation optical communication .
Dixon keeps majority and chairman role after fresh share issue
Source: .
| Term | Detail |
|---|---|
| Parties | Dixon Technologies, Gemtek, Dixon Electroconnect |
| Products and market | SFP transceivers, BOSA and other agreed telecom products in India |
| Shareholding after closing | Dixon 60%, Gemtek 40% |
| How stake is created | Subscription to fresh equity, share count based on valuation reports |
| Board and control | Dixon nominates 3 directors, Gemtek 2, Dixon nominates Chairman |
| Closing | Subject to customary conditions precedent, expected by 3 February 2027 |
Dixon Electroconnect is today a wholly owned subsidiary of Dixon . Its authorised and paid-up capital is INR 1,00,000 and its turnover as on 31 March 2026 was NIL because it had not started business operations .
The 60-40 holding will be created only on closing through new shares . Neither Dixon nor Gemtek will hold a stake in each other . Both partners will have information rights on the venture's affairs, alongside usual terms on reserved matters, exit rights, representations, indemnities and dispute resolution .
Telecom scale gives the new parts a customer base
Annual telecom sales rose from small base to Rs 5,000 crores
Sources: FY24 to FY26 — ; FY27 target — .
| Period | Telecom revenue shared on calls |
|---|---|
| FY24 level | INR700 crores |
| FY25 | INR3,600 crores |
| FY26 | INR5,000 crores |
| FY27 target | INR6,700 crores to INR7,000 crores (July guidance) |
The climb shows telecom has moved from a small customer-equipment base to a second growth engine beside phones. Management links it to 5G, fixed wireless access and broadband equipment, with localised subcomponents, scaled lines and a healthy order book .
The base is largely home broadband equipment such as Wi-Fi routers, fixed wireless equipment and IPTV set-top boxes, where Dixon says it is already the largest in India . The newer leg is complex network-side hardware. Production of microwave backhaul radios for a large global brand has scaled up, with exports expected in the current fiscal year . Dixon also says it has commenced a joint design and manufacturing agreement with a marquee customer as it moves from pure contract manufacturing to solution-oriented work .
Quarterly sales show scale holding while margins stay above phones
Sources: Q2 FY26 — ; Q1 FY27 — .
| Period | Telecom revenue and comparison shared |
|---|---|
| Q2 FY26 | INR1,635 crores, against INR661 crores a year earlier |
| Q1 FY27 | Around INR2,100-odd crores, almost flat versus prior quarter |
Recent quarters show the vertical holding scale even as the phone market softened. That steadiness supports the case for adding higher-value optical parts for use both in telecom networks and in data centres .
Profitability helps explain the attraction. Operating margin on the telecom side in Q1 FY27 was almost 5.1%, described as slightly higher than the mobile segment . Mobile and other EMS revenue in the same quarter was INR14,179 crores with operating profit of INR373 crores . Management said group margin in the quarter reflected temporary compression from expiry of Mobile PLI 1 in March 2026 and from higher selling prices as elevated input costs were passed through .
Group scale and policy support frame the investment
Large sales come with thin profits due to pass-through model
Sources: FY26, Q4 FY26 — ; Q1 FY27 — .
| Period | Revenue | EBITDA as disclosed | PAT after minority as disclosed |
|---|---|---|---|
| FY26 | INR48,893 crores against INR38,880 crores last year | INR1,887 crores against INR1,528 crores | INR845 crores against INR706 crores |
| Q4 FY26 | INR10,520 crores | INR418 crores | INR192 crores |
| Q1 FY27 | INR15,557 crores | INR472 crores | INR218 crores |
FY26 and Q4 FY26 figures exclude exceptional gain . Q1 FY27 figures exclude fair value gain on the stake held through Dixon Aditya Infotech . The two adjustments have different bases, so the quarters are not strictly like-for-like on profitability.
Revenue in this business largely reflects material cost plus a per-unit conversion charge . When memory and other input prices rise, sales rise but margin percent looks optically lower while absolute profit per unit stays intact . For FY27 without Vivo, management targeted almost INR56,000 crores with flat mobile volumes, implying continued growth with absolute profitability to rise even as margin stays under pressure until component integration kicks in .
Balance sheet leaves room for new equity investment
Sources: FY26 — ; Q1 FY27 — .
| Period | Returns | Working capital cycle | Capex |
|---|---|---|---|
| FY26 | ROCE 44.8% and ROE 28.1% | Negative 8 days | Almost INR1,058 crores |
| Q1 FY27 | ROCE 34.1% and ROE 23.4% | Negative five days | To the tune of INR335 crores |
Discipline on working capital and asset turns underpins capacity to fund equity subscriptions and new plants. Q1 FY27 also saw temporary strategic inventory build from the memory price hike, described as a phenomenon that will get corrected .
Optical parts extend Dixon's component and partnership push
Dixon was selected as an ECMS beneficiary for camera modules and optical transceivers, which it called a milestone in moving up the value chain toward an integrated design-oriented component partner . Capex earmarked at that time for SFPs and optical transducers was INR50 crores . Separately it filed ECMS applications for display modules, camera enclosures, batteries, optical transceiver-SFP and mechanical enclosures with investment of about INR3,000 crores over three years, positioned as the next phase for growth and margin expansion .
Management explicitly links growth to partnerships, citing Inventec for IT hardware, Gemtek for optical transducers and Longcheer for mobile design as masters in their domains from whom Dixon aims to acquire talent and shop-floor capability . The parallel IT push shows the same pattern, with a 60-40 venture with Inventec for notebooks, PCBs and SSDs and discussions on general and data-centre servers to address a surge in cloud and AI infrastructure demand .
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Sources
- 1 Announcement under Regulation 30 of SEBI LODR- Execution of Joint Venture Agreement between Dixon Technologies (India) Limited, Dixon Electroconnect Private Limited and Gemtek Technology Co., Ltd.
- 2 Earnings-call transcript, 2026-08-05
- 3 Earnings-call transcript, May 2026
- 4 Earnings-call transcript, Feb 2026
- 5 Earnings-call transcript, Oct 2025