India is fast emerging as the main alternative manufacturing destination for Apple iPhone suppliers amid the heightened US-China tensions. After Foxconn and Wistron, now Apple’s second-largest contract manufacturer, Pegatron is planning to establish a new manufacturing facility in India and has already registered a local subsidiary in the country.
The development is a part of Apple’s moves to shift iPhone production away from China and reduce its dependence on the country.
Pegatron’s company officials are reportedly in talks with multiple state governments in India to find land for factories which will be used to make iPhones locally.
The development follows Foxconn’s planned $1 billion investment in India to expand its factory in Tamil Nadu, which already makes iPhone XR. The investment will be made over a period of three years.
Foxconn has already applied for India’s Rs 41,000-crore production-linked incentive (PLI) scheme that aims to attract global mobile device makers and boost local companies for electronics manufacturing.
Reuters recently reported that there is a “strong request” from Apple to its clients to move part of the iPhone production out of China.
In the last fiscal, Apple’s India turnover stood at around $1.5 billion, while iPhones accounted for less than $1 billion.
Pegatron, the $45-billion Taiwanese contract manufacturer also makes notebooks, desktops, motherboards, tablet devices, game consoles, LCD TVs, multimedia players, smartphones, broadband and networking devices.
In March this year, Pegatron CEO Liao Syh-jang informed investors the company would expand its overseas production facilities depending upon its client’s wishes and incentives offered by the governments abroad.
According to market trackers, Apple currently controls 2-3% smartphone market share in India, which is the world’s second-biggest smartphone market. However, the company is looking to make India its new export hub by reducing dependence on China.
Currently, Wsitron Corp in the southern tech hub of Bengaluru makes iPhone 7. It used to make the iPhone SE smartphone, which Apple discontinued recently.
Wistron is now planning to set up a new facility which will make more Apple devices.
Analysts are of the view that India offers is a market with a billion mobile connections with only about half of the connections running on smartphones. The possibility to migrate 500 million users from feature phones to smartphones offers a great opportunity to global electronics players.
However, India is aiming to become a global manufacturing hub for both components and mobile handsets.
India is targeting to become a $400 billion electronics manufacturing market by 2025 driven by the three schemes production-linked incentive (PLI) scheme, Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) and Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme.