Pegatron, The Apple Supplier, Is Planning To Open 2nd Indian Plant

According to two people with direct knowledge of the issue, Pegatron Corp., a Taiwanese supplier to Apple Inc., is allegedly in discussions to establish a second factory in India. The new plant will “assemble the newest iPhones,” the original report said. According to the people, who asked to remain anonymous because the conversations are private, Pegatron plans to build a second facility near Chennai in the southern state of Tamil Nadu just six months after finishing the first one with an expenditure of $150 million. Pegatron indicated that any asset purchases would be disclosed in accordance with requirements but would not elaborate.

A request for comment from Apple was rejected. The next market for Apple’s expansion is anticipated to be India. According to the India Cellular and Electronics Association, almost 50% of the $9 billion worth of cell phones exported from India between April 2022 and February of this year were iPhones.

Status Of Pegatron And Apple

According to research firm Counterpoint, Pegatron presently produces 10% of Apple’s iPhones in India on an annualized basis. Apple and its main suppliers have started shifting production away from China to avoid potential damage to their business from increasing Sino-U.S. trade tensions. Recently, Pegatron has made an effort to strengthen its position in North America and Southeast Asia.

The second Pegatron factory, which would be located inside Mahindra World City adjacent to Chennai, not far from where the first plant was opened in September 2022, is currently undergoing final planning. It is unclear how much Pegatron plans to invest in the expansion. The new plant, according to the initial source, will be smaller than the old one, though.

Since it started assembling iPhones there in 2017 through Wistron and later Foxconn, Apple Inc. has made a significant investment in the South Asian country to the Indian government’s goal for domestic manufacturing. This Thursday, the Indian state of Karnataka announced that it had authorized Foxconn to invest $968 million there, resulting in the creation of 50,000 new jobs.

After a contract victory, Foxconn has plans to build a $200 million factory in India to manufacture wireless earphones for Apple, according to Reuters last week. It currently assembles a few iPhone models in its Tamil Nadu factory. Pegatron also develops, designs, and manufactures computer components and accessories. Notebooks, netbooks, desktop computers, portable devices, gaming consoles, motherboards, video cards, LCD Televisions, and broadband communication products like cellphones, set-top boxes, and cable modems are among Pegatron’s main offerings.

When ASUSTeK Computer split into three independent companies in January 2008, Asus (focused on applied first-party branded electronics and computers), Pegatron (focused on OEM manufacturing of motherboards and components), and Unihan Corporation started a comprehensive reorganization of its corporate structure (focused on non-PC manufacturing such as cases and molding). The current pension balances were practically canceled out during the restructuring, which was heavily criticized. All past employee contributions were paid out by the corporation. Pegatron Corp. was split out by Asus on June 1st, 2010.

Growth Of Pegatron

Pegatron has developed into a sizable supplier of parts to Tesla Inc. in recent years. Pegatron was obliged to halt operations when some of its workers tested positive for the COVID-19 virus during the second wave of the epidemic in India. The pandemic had a negative impact on Apple’s Shenzhen operations. Thus, some of the Apple iPhones were produced in Pegatron’s plant in India.

As of March 2010, Pegatron employed 200 people in the US, Mexico, and Japan, 5,646 people in Taiwan, 89,521 people in China, 2,400 people in the Czech Republic, and 200 people in total. Pegatron has 200 employees in the United States, Mexico, and Japan as of March 2010, 5,646 in Taiwan, 89,521 in China, 2,400 in the Czech Republic, and 200 elsewhere. Along with having locations for customer service in the US and Japan, Pegatron also has production facilities in Taiwan, the Czech Republic, Mexico, Indonesia, and China.

One of Apple’s contracted producers of the iPhone, Pegatron, with headquarters in Taiwan, invested 1,100 crores in building a new mobile phone manufacturing plant in the Mahindra World City commercial sector of the Chengalpattu district close to Chennai. According to the agreement of understanding that the business signed with the Tamil Nadu state government, Pegatron hoped to create 14,000 employees at the factory with this investment.

The factory was added to the other production facilities that Foxconn and Wistron Corp., two other Taiwanese contract manufacturers, had already established in India. At the opening of the Pegatron facility, MK Stalin, the chief minister of Tamil Nadu, said that the state produces 20% of the nation’s electronics. These facilities have increased the number of local device assemblies, which now include products like Apple’s iPhones. Apple produces its most recent iPhone models locally in India as well. This is the first time the company has done so immediately following a global launch.

On September 21, analysts at financial and investment services company JP Morgan predicted that Apple might shift up to 5% of its manufacturing to India by the end of 2022 as part of its effort to diversify its iPhone manufacturing ecosystem in light of the prevailing geopolitical relations between the US and China. One in five iPhones could be produced in India by the end of 2025.

Rajeev Chandrasekhar, minister of state for information technology, said during the inauguration that Pegatron’s newest factory and other facilities like them can help India boost its domestic electronics manufacturing sales to $300 billion by FY26 from $75 billion at now. He continued by saying that since 2015–16, encouraging local manufacturing has attracted $6,500 crore in foreign investments, added 40,000 jobs, and generated mobile phone exports worth $50,000 crore.

Indian electronics exports totaled $16 billion in FY22, with mobile phones making up roughly one-third of the total, according to a report released on August 29 by the industry association India Cellular and Electronics Association (ICEA) and the Indian Council for Research on International Economic Relations (ICRIER). The survey predicted that by March 2023, smartphones would make up at least 50% of all electronics exports, which might total $21-25 billion. The federal government predicts that India’s electronics exports will amount to $120 billion by FY26.

Working Condition

Poor working conditions and staff harassment were made public by a BBC investigation in December 2014 at Pegatron factory producing Apple goods close to Shanghai. The investigation uncovered forced overtime, employees falling asleep on the production line during shifts ranging between 12 and 16 hours, personnel being required to work eighteen days straight without a day off, and twelve employees being forced to share a small dormitory room.

Apple learned that Pegatron employed student employees in its manufacturing in mainland China in November 2020. As a result, Apple cut off its relationship with Pegatron and declared that it would not give the company any new business until this behavior was stopped.

Pegatron’s Shanghai subsidiary Pegaer Technologies (Shanghai) Co., Ltd. had labor unrest in December 2020. Many thousands of people gathered to demand payment. The plant manager then started beating up the crowd that had gathered, and numerous police officers arrived to put an end to it. Some of the victims were knocked to the ground, and many of their whereabouts are still unknown. A rights defense incident resulted from the arrest of over ten people.

Edited by Prakriti Arora