iPhone maker Wistron – which was the first company to produce iPhones in India – has exited the business, saying that Apple’s tough negotiations on price meant the company was unable to make a profit.
The news comes at a time when the Cupertino company is moving more and more of its iPhone production from China to India …
The need for Apple to lessen its dependence on China as a manufacturing center has been clear for many years, but the impact of the pandemic at the world’s biggest iPhone assembly plant really underlined the problem. The COVID-19-related disruption was estimated to have cost the company a billion dollars per week.
India is seen as Apple’s main hope when it comes to relocating production outside of China. Apple started slowly, giving Wistron a contract to make the original iPhone SE in the country. Foxconn and Pegatron later set up their own Indian iPhone plants, and by last year even the latest flagship models were being made in the country.
A report last year suggested that a quarter of all iPhones could be made in India by 2025, and a later one indicated that this could rise to half of all iPhones by 2027.
iPhone maker Wistron quits
India’s Economic Times reports that Wistron has now ended its iPhone contract.
Wistron is packing its bags. The company is in the process of selling its iPhone assembly unit in Kolar, near Bengaluru […]
Employees and industry executives told ET that Wistron had been contemplating an exit as it didn’t see long-term profitability in being a mere assembler of the final product […]
With the company having stopped iPhone assembly in China after selling its Kunshan unit to Luxshare in 2020, the India business became too small for it to focus on.
“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,” said an executive.
Wistron had a troubled past
Wistron’s struggle to make money from the iPhone contract may explain why it ran into problems with paying its workers properly.
Back in 2020, there was a major riot at its Bangalore plant over underpaid wages, with millions of dollars’ worth of damage done. Both the Indian government and Apple investigated, and both found that Wistron was indeed guilty of serious labor law violations, including underpayment of its workers.
Questions were raised at the time about whether the incident would lead to the loss of the company’s iPhone contract. In the end, production was suspended for three months, and Apple put the supplier on probation.
How will this affect Apple’s plans?
Although Wistron was the first to assemble iPhones in India, it was by far the smallest of the three players. That limits the potential impact on Apple’s plans to expand iPhone production within the country.
It also appears that iPhone production at the former Wistron plants will continue under new ownership. We learned last week that Luxshare bought two of the plants, and has been given a contract to make flagship models from day one.
Additionally, today’s report says that the Tata Group is buying a third Wistron iPhone plant, and is currently preparing for iPhone 15 assembly.
While the deal is yet to be closed, Tata executives are already taking up key positions.
However, worker recruitment and supervision was reported to be problematic, with managers brought in from China failing to recognize and manage a different work culture. Recruiting local managers is tough because the plant is around 25 miles from the city, making it a brutal commute on poorly maintained and crowded roads. Tata may well find itself struggling with the same issues.
Photo: Dixit Dhinakaran/Unsplash
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