Apple partner Wistron is winding down its operation in India by selling its iPhone manufacturing facility to the country’s conglomerate Tata Group. It decided to leave India due to low-margin business and the challenges of adapting to the local work culture.
The development comes when Wistron’s counterparts Foxconn and Pegatron are doubling down on India. All three companies are approved under the Indian government’s production-linked incentive scheme.
Reasons Wistron is exiting
According to a report by the Economic Times, the Taiwanese contract manufacturer is exiting the market due to its inability to get deeper into Apple’s supply chain, i.e. component manufacturing and vendor-managed inventory holding. On the other hand, Apple’s other two partners, Foxconn and Pegatron, are engaged in inventory management in India.
Wistron, as per the report, tried to negotiate with Apple for higher margins but couldn’t succeed. “There lacked systems to gauge demand and ship to various units, which Wistron lacked. Plus, it is a much smaller player than Foxconn and Pegatron,” sources told the publication.
Wistron was the first of Apple’s global contract manufacturers to start assembling iPhones in India in 2017 and currently makes the iPhone 14, iPhone 13, iPhone 12 and the iPhone SE.
The company forayed into the Indian market in 2008 with a repair facility servicing PCs, laptops, servers and other devices it locally made.
Wistron invested Rs 1,000 crore investment under the production-linked incentive (PLI) scheme and clocked over Rs 200 crore turnover in iPhone manufacturing in FY23. As per the report, it received Rs 600 crore in incentives from the government.
“…it was too early for Wistron to start seeing profit in India,” another source told the publication.
“Wistron has not been able to make any money from the Apple business in India,” the publication cited industry sources who added that it was getting difficult for the company to procure components from multiple regions and that just doing assembly was non-profitable.
Tata Group assembling iPhone 15 models
Tata Group is currently holding trials for assembling upcoming iPhone 15 models in India even as the deal is yet to be closed. The report added that Tata executives are already taking up key positions.
Wistron, after giving control to Tata Sons to its iPhone factory, will continue with its repair facility in India.
Wistron is already seeing protests against the management from 400 senior production staff over parity in salaries with junior contractual workers. Although such issues are not new, the company had seen violence breaking out at its local unit in December 2020, which resulted in Apple putting Wistron on probation, halting the unit until corrective measures were taken.
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