Pegatron Corp., a Taiwanese contract manufacturer, has begun building Apple Inc.’s latest iPhone 14 model in India. Pegatron is expected to construct the iPhone 14, the company’s flagship smartphone, at its brand-new cutting-edge manufacturing facility on Chennai’s outskirts.
Pegatron, which inked an MoU with the Tamil Nadu government in 2021, has invested Rs 1,100 crore in the fresh new factory, which would be operational on September 30, 2022. The assembly of the iPhone 14 in India by two Apple contract manufacturers is also a significant boost to the Narendra Modi government’s ‘Make in India’ program.
Two of Apple’s three suppliers are based in Tamil Nadu, which presently accounts for 20% of national electronics and hardware production but plans to expand that to 25% and grow industry output to $100 billion by 2025.
The state, which already has 16 leading electronics manufacturers, wants the electronics industry to compete with vehicles, which account for 37.6% of the country’s automobile and auto component exports, clothes (30.8%), and footwear (46.4%).
This makes Pegatron the second Apple supplier in the country to manufacture the iPhone 14, according to people familiar with the topic who declined to be identified because the manufacturing plan is not public.
It comes as officials imposed an unexpected Covid-19 shutdown on Apple’s main iPhone Pro manufacturing base in the Chinese city of Zhengzhou, managed by Foxconn Technology Group. This issue highlighted Apple’s reliance on China, while India’s growth was in line with existing diversification objectives, according to the people. Representatives from Apple and Pegatron both declined to comment.
Foxconn began producing the iPhone 14 in India in September, just weeks after its global debut and far closer to the commencement of manufacturing in China, where the vast bulk of iPhones are still manufactured. Apple’s primary manufacturing partner retains exclusive rights to the iPhone Pro models, which are assembled in Zhengzhou.
The Pegatron factory in India’s southern Tamil Nadu state, which employed over 7,000 people as of the end of September, started producing iPhone 12 phones earlier this year as well. In general, Pegatron receives orders for Apple’s entry-level models.
Based in Cupertino, California, Apple is looking for alternate production hubs in the midst of a trade conflict between Washington and Beijing, as well as strict enforcement of Chinese President Xi Jinping’s Covid Zero policy. Simultaneously, New Delhi positions India as a rival to China’s industrial supremacy.
Since Foxconn’s coronavirus troubles surfaced this week, the value of Redington, a local Apple reseller, has skyrocketed. The majority of iPhone components are still made in China and must be delivered to wherever handsets are assembled, according to Counterpoint senior analyst Ivan Lam.
According to IDC India, Apple’s India shipments in 2023 are expected to exceed the record 6 million units predicted in 2022 due to rising demand for luxury smartphones backed by discounts and payback offers. In 2021, Apple will ship 4.8 million units.
All of Apple’s major Taiwanese suppliers, including Foxconn, Pegatron, and Wistron Corp., have increased iPhone assembly capacity in India, aided by Prime Minister Narendra Modi’s financial incentives scheme. This has also aided South Asian iPhone exports.
After a years-long effort to acquire manufacturing capabilities in the country, Apple began building iPhones in India in 2017 through Wistron. While India is now a minor consumer market for Apple, the country of 1.4 billion people gives the US conglomerate significant space for development as incomes and internet connectivity rise.
All three companies are participants in the government’s Rs 41,000-crore production-linked incentive program (PLI), with Foxconn and Wistron exceeding their first-year targets in FY22. Pegatron began manufacturing iPhones this year and will be eligible for incentives in the following fiscal year through March 20, 2023.
China’s participation in global iPhone production is predicted to decline from 95.8% in 2021 to 91.2-93.5% in 2022. According to Counterpoint Research, India’s contribution would rise to 5-7% of worldwide shipments and 85% of local demand by the end of the year, up from 3% last year.
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