Taiwanese iPhones Assembler Wistron entered India in 2008 with a repair facility servicing PCs, laptops, servers and other devices it manufactured.
Wistron, a Taiwanese contract manufacturer, is selling its iPhone assembly unit in Kolar, near Bengaluru, to the Tata Group. This departure comes as Apple’s other contract makers, Foxconn and Pegatron, double down on India. Wistron entered India in 2008 with a repair facility servicing PCs, laptops, servers and other devices it manufactured. In 2017, it started making iPhones for Apple and now makes the iPhone 14, iPhone 13, iPhone 12 and the iPhone SE. The company will continue with its repair facility.
The sale of the Kolar unit is a setback for Apple’s plans to expand its manufacturing operations in India. However, the Tata Group is a well-respected company with a strong track record in manufacturing. It is expected that the Tata Group will be able to turn around the Kolar unit and make it a profitable operation. An industry executive said it was too early for Wistron to start seeing profit in India after the roughly Rs 1,000 crore investment under the production-linked incentive (PLI) scheme. The company saw more than Rs 200 crore turnover in iPhone manufacturing in FY23 and got about Rs 600 crore in incentives from the government.
Important Facts about Wistron in India
- Wistron was the first of Apple’s three global contract manufacturers to start assembling iPhones in India in 2017.
- The company has faced a number of challenges in India, including labor unrest, supply chain issues, and competition from other contract manufacturers.
There are a number of reasons why Wistron is exiting India.
Here are the top 7:
1. Inability to get deeper into Apple’s supply chain.
Wistron was the first of Apple’s three global contract manufacturers to start assembling iPhones in India in 2017. However, it was unable to get deeper into Apple’s supply chain, which includes component manufacturing and vendor-managed inventory holding. This limited Wistron’s ability to make a profit on its iPhone business in India.
2. Coping with the local work culture.
Wistron also faced challenges in coping with the local work culture in India. In December 2020, workers at the Kolar unit protested against unpaid wages and arduous hours. The violence that erupted during the protest cost Wistron about Rs 430 crore in damages. Apple put Wistron on probation, halting the unit until corrective measures were taken. It resumed work in February 2021. The violence that erupted during the protest led to Wistron being fined Rs. 430 crore by the Karnataka government. Last week, 400 senior production staff protested against the management, demanding parity in salaries with junior contractual workers
3. Lack of profitability.
Wistron has not been able to make any money from the Apple business in India. It has tried to negotiate with Apple for higher margins, but being a smaller player as compared to Foxconn and Pegatron globally, it did not have the necessary leverage.
4. Competition from Foxconn and Pegatron.
Foxconn and Pegatron are the two other major contract manufacturers for Apple. They are both much larger than Wistron and have a much deeper relationship with Apple. This gives them a significant advantage in terms of pricing and margins.
5. Difficulties in procuring components.
The COVID-19 pandemic has made it difficult for Wistron to procure components for its iPhone business in India. This has led to production delays and cost overruns.
6. High taxes.
The Indian government imposes high taxes on imported components. This makes it more expensive for Wistron to assemble iPhones in India.
7. Weak demand.
The demand for iPhones in India has been weak in recent years. This is due to a number of factors, including the rising cost of smartphones and the increasing popularity of local brands.
The departure of Wistron is a setback for Apple’s plans to expand its manufacturing footprint in India. However, Foxconn and Pegatron are likely to step up their efforts to fill the void. This could lead to increased competition and lower prices for consumers in India.
In addition to the reasons listed above, there are a few other factors that may have contributed to Wistron’s decision to exit India. These include:
- The company’s recent labor troubles.
- The ongoing COVID-19 pandemic.
- The rising cost of doing business in India.
Despite these challenges, India remains a key market for Apple. The company is expected to continue investing in the country and expanding its manufacturing operations there.
It remains to be seen how the Tata Group will fare in the iPhone assembly business. However, the company’s experience and track record in India give it a good chance of success.
