Spreadtrum Communications Invests $10M In Micromax

Spreadtrum Communications Inc, a fabless semiconductor provider in China, has invested $10 million inMicromax Informatics Ltd, an Indian mobile brand. The two companies will work together through a joint R&D collaboration to deliver new offerings across Micromax's portfolio of products. Spreadtrum will also become one of the preferred mobile chipset suppliers of Micromax.

In the past, Micromax attracted a lot of interest from private equity investors who had invested a total of $88 million to buy the shares of the company. However, bulk of the money went to the co-promoters of Micromax who sold their shares (more on that here).

Three private equity investors -- Sequoia Capital, Sandstone Capital and Madison India Capital -- together bought 5.75 per cent stake (at that time a pre-IPO investment) from the four co-promoters for around Rs 210 crore in September 2010.

Another private equity investor TA Associates had invested Rs 200 crore, half of which was through share purchase from the co-promoters. TA Associates had invested Rs 100 crore in the company in December 2009 and at the same time, bought shares from the promoters for a similar amount. The company also planned an IPO but later withdrew its public offering, citing weak market conditions.

Micromax MD Rajesh Agarwal said, "Our partnership with Spreadtrum supports our objectives of feature customisation to suit local needs, rapid time to market and innovation on value for money platforms. The Indian mobile industry is growing at a rate of 12 per cent per year and partnerships like this one will help us capture the growth opportunity within India and also expand our distribution to other countries."

Micromax was co-founded by Rajesh Agarwal, Sumeet Arora, Rahul Sharma and Vikas Jain, and the company started making mobile handsets in 2008. It currently ships more than 60 models, ranging from dual-SIM feature phones to 3G Android smartphones, and has an established sales presence across India, Hong Kong, Bangladesh, Nepal, Sri Lanka, the Maldives, the UAE, Saudi Arabia, Kuwait, Qatar, Oman, Afghanistan and Brazil.

"Our mutual co-operation with Micromax will help expand our reach in emerging markets and ensure that our R&D investments are closely aligned with the world's leading brands," said Leo Li, president and CEO of Spreadtrum. Spreadtrum Communications develops mobile chipset platforms for smartphones, feature phones and other consumer electronics products, supporting 2G, 3G and 4G wireless communications standards. The company's solutions combine its integrated chipsets with customisable software and reference designs, and its customers include global and China-based manufacturers.

Micromax currently holds third position among the handset manufacturers in India and late last year, the company made major top management changes by appointing Deepak Mehrotra as the new CEO besides hiring other senior people from Sony Ericson (now Sony Mobile) and HTC.