OPEN APP
Home >Companies >News >Wistron’s loss may be rivals’ gain

Apple Inc.’s move to suspend new business to supplier Wistron, the first to assemble iPhones in India, has given an unexpected lift to rival suppliers Foxconn and Pegatron, who are angling to capture a larger share of the iPhone maker’s orders as well as from other companies.

An initial investigation by Apple into the rioting at Wistron’s India plant discovered management lapses by the Taiwanese company that led to delays in salaries to some workers, Apple said on 19 December, adding that it won’t give additional work to the company until the problems are addressed.

Also Read | Inside the rumble in India’s coding jungle

The developments have left a cloud of uncertainty over Wistron, which sold a part of its business in China to focus on India. On the same day, Wistron’s headquarters in Taiwan took control of key decisions in India and removed its vice-president who was overseeing the business in India. The company acknowledged payment issues to workers and initiated a restructuring exercise.

The fiasco at the factory near Bengaluru has happened at a time Foxconn, one of the three contract manufacturers of iPhones, is looking to invest more to expand its factory in Tamil Nadu, and Pegatron is set to open its first plant in India. In November, Pegatron said its board approved a 1,100 crore investment in India as part of its “long-term investment" plan. Its Indian subsidiary was incorporated in July and is among the 16 global and Indian mobile handset makers that got approval in October to start manufacturing under the government’s production-linked incentive scheme.

Foxconn assembles the iPhone XR and iPhone 11, two of the largest-selling models for Apple, at its Chennai plant.

Foxconn chairman Liu Young-Way earlier in June said it is “fully pushing ahead with next steps there (in India)" and will invest further.

“The (Wistron) incident has made global headlines, and China has tried to project it as an example to other firms looking to relocate to India. It was easy for Wistron to find a fall guy, but there is a lack of clarity in the steps Wistron will initiate from Taiwan to restructure teams following the incident. No one knows what the restructuring will look like, and only then can the company start planning for its future in India," said a person aware of the development, requesting anonymity.

However, people aware of the processes said it will not be easy for Apple to take orders from Wistron and give it to another partner as they deal with highly advanced parts and firms have invested heavily on setting up this infrastructure.

The three manufacturing partners of Apple are estimated to invest $900 million in India over the next five years to tap into the government’s incentive scheme, Reuters reported in September.

Wistron had also committed to invest an additional $165 million in India and ramp up hiring to capture a larger slice of Apple’s plans of scaling up its local revenue to $40 billion over the next five years. But the plans may now face delays.

The interest for firms like Wistron, Foxconn and Pegatron in India lies beyond Apple, as iPhones have a much smaller market than Android smartphones, industry experts said.

Wistron, Apple, Pegatron and Foxconn didn’t respond to queries.

India estimates domestic manufacturing of electronic gadgets, mobile phones, laptops, television and other components will contribute one-fifth of its economy by 2025.

“If India plans to scale manufacturing jobs by 10X in 5-6 years, the right kind of signals such as labour laws matter. The Wistron incident has lessons for the entire industry," said Tarun Pathak, associate director at Counterpoint Technology Market Research.

A decision by Wistron to move operations back to China to make up for any shortfall or delay in resuming the factory would be a setback to ‘Make in India’ programme.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Click here to read the Mint ePaperMint is now on Telegram. Join Mint channel in your Telegram and stay updated with the latest business news.

Close
×
Edit Profile
My ReadsRedeem a Gift CardLogout