India is the world's third largest smart phone market. Due to the size of the market, OEMs are fighting for the number one spot. Which could be one of the biggest reasons HTC CFO, Chialin Chang, has expressed interest in moving some production to India.
India has become the third largest smart phone market in the world. Evidence of this is Samsung slashing prices of the Galaxy S5 – their 2014 flagship device. The reason Samsung decided to lower the price seemed to be HTC. The Samsung Galaxy S5 launched in India first with a price tag of $860. Then when HTC launched their 2014 flagship-the HTC One M8- with a price tag of only $827, Samsung may have felt the heat. That heat led them to lower the price of the Galaxy S5 down to $775. Doing so is evidence of how fierce the competition is in India and may be too fierce for other OEMs like Nokia to keep up on their own.
Nokia has had presence in India for sometime now, even a production facility in Chennai. Though that southern city in India has caused Nokia more than enough problems. Earlier this year, Reuters reported that there was a raid conducted on Nokia's Chennai facility. Though the reports were cloudy, sources came straight from the very people conducting the raid; the Tax Department of India. According to those sources, the reason for the raid was due to allegations against Nokia involved in tax evasion. The default totaled close to 30 billion rupees ($543 million). That seems to be a big enough reason for Nokia to jump ship. However Nokia won't be taking care of this all on their own, they will soon have Microsoft helping out.
As Nokia battles it out with the Tax Department in Indian courts, Microsoft is getting ready to take the reins. Since Microsoft has acquired Nokia's mobile division. The Microsoft Nokia acquisition is due to be completed on Friday April 25th 2014. Though Microsoft may not want to deal with any of these tax problems, or at least according to reports from the Economic Times. ET has reported that Nokia just wants the tax issue to be done with before Microsoft takes over. A sign of that, would be Nokia offering early retirement to some employees. This move suggests that Nokia is either downsizing the workforce in Chennai, or planning to shut down the plant altogether. However that uncertainty has led HTC CFO to only express interest, and not really making any sudden moves.
Chang told ET that HTC would "look into" the Chennai plant, however there has been no word of the plant going up for sale. All we have so far are pieces to a puzzle being laid out in front of us. The big picture has yet to be revealed. So HTC approaches Chennai with caution. Though they still want it to be known that they have dibs on the plant. If and when Nokia decides to sell the Chennai plant, HTC has claimed the first spot in line. Which brings us full circle to HTC acquiring the plant in Chennai. The company has informed investors that India is a very important market. HTC has also realized they would be able to compete better if they produce the product locally to India. Producing devices locally would mean lower prices, and the ability to restock shelves quicker. All in all, HTC would have a better chance of becoming the number one smart phone OEM in India. Of course, they need to acquire the facility first.