Apple story in India: Wistron in trouble, but what are Foxconn, Pegatron up to?

All eyes are on the two contract manufacturers of Apple in India, Foxconn and Pegatron, in the aftermath of the violence in third manufacturer Wistron's unit in Karnataka.

Following the riots in Wistron's Narasapura facility (60 kms from Bengaluru), the company has been put on notice by Apple and it has also emerged that Wistron had not paid its workers properly and transgression of local labour had happened.

As Apple is planning to move its manufacturing bases from China for various reasons, and Indian government itself had set much store on Apple iphones assemblers in India, the trouble in Wistron's unit had larger ramifications.

However, reports suggest both Foxconn and Pegatron seem unfazed by the trouble for Wistron. If anything, the two companies look ready to cash in on the situation.

Pegatron plant at Mahindra World City near Chennai

Taiwanese media is reporting that Pegatron has confirmed the news that it has registered a company in Chennai as a subsidiary. Construction work on Pegatron's plant at Mahindra World City near Chennai is underway and is expected to be completed in a month or two.

Pegatron is Apple's second-largest contract manufacturer and is said to have committed to an investment close to Rs 11,00 crore over the next five years in India. Pegatron is now looking for another plot of land in Tamil Nadu or Andhra Pradesh to set up its second Indian factory.

If construction wraps up on schedule, Pegatron can begin commercial production in June 2021 at the earliest.   

Despite the riot at Wistron plant, Pegatron is on track to step up its investment in India, according to company chairman TH Tung.

Foxconn too gung-ho

The story at Foxconn India is no different. Foxconn is considering expanding its Sriperumbudur (Tamil Nadu) plant. It makes the iPhone XR and iPhone 11 at the unit. Its Chairman Liu Young-Way said it is “pushing ahead” and will invest more in India.

Foxconn operates two factories in India, one in Sriperumbudur in Tamil Nadu, and another in Narsapur In Andhra Pradesh (different from Narasapur in Karnataka). The Sriperumbudur plant makes Apple’s iPhone XR and iPhone 11, while their facility in Narsapur makes smartphones for China’s Xiaomi Corp, among others.

The Taiwanese electronics manufacturer in July announced that it would invest up to $1 billion to expand their Sriperumbudur plant. The expansion plans are expected to take place over the course of three years and create around 6,000 new jobs.

Apple's plans not hit much

Meanwhile, Wistron seems to be in some trouble as Apple has placed it on probation, saying on Saturday it would not award the Taiwanese contract manufacturer new business until it addressed the way workers were treated at the Narasapura plant.

Early findings of an Apple audit in the wake of violence at the Wistron plant showed violations of its 'Supplier Code of Conduct'.

Contract workers angry over unpaid wages destroyed property, gear and iPhones on December 12, causing huge losses to Wistron and forcing it to shut the plant.

Apple said Wistron had failed to implement proper working hour management processes, which "led to payment delays for some workers in October and November".

In a widely expected move, Wistron also suspended the work at its violence-tarred Narasapura plant. 

Wistron, for its part, has admitted some workers at the plant in Karnataka's Narasapura had not been paid properly or on time, and it was removing its vice president overseeing its India business.

Wistron said it is re-structuring its teams and setting up 24-hour hotlines for employees to make anonymous complaints.

Apple began the assembly of its first iPhone model in India via Wistron in 2017. It has now ramped up assembly operations, with Foxconn and Pegatron.

Thanks to these two suppliers, Apple's plans to scale up in India, a market it has bet on to expand its manufacturing base beyond China, will not suffer much damage.

India too had gone on a damage-control mode to save its much-publicised make in India campaign.

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