Pegatron is reportedly in talks to open a second factory in India, as Apple suppliers continue to diversify production away from China
Pegatron Corp is at the centre of reports concerning another shift of Apple device manufacturing away from mainland China.
Two sources with direct knowledge of the matter told Reuters that Apple’s Taiwanese supplier Pegatron is in talks to open a second factory in India.
Earlier this month Apple’s principle iPhone maker, Taiwan-based Foxconn, reportedly said it will build a new 300-acre facility in Bengaluru, India, to manufacture electronics.
This week is emerged that Pegatron plans to add a second facility near the southern city of Chennai in Tamil Nadu state – just six months after opening the first with an investment of $150 million, the sources told Reuters.
The new factory, the first source said, is “to assemble the latest iPhones.”
Pegatron declined to comment but reportedly said, “Any acquisition of assets will be disclosed based on regulations.”
Apple did not respond to a request for comment.
The talks for starting a second Pegatron facility on lease are ongoing, and it will be located inside Mahindra World City near Chennai, close to where the company inaugurated the first plant in September 2022.
Pegatron’s planned investment outlay for the expansion is not immediately clear, Reuters noted. The first source, however, said the new factory will be smaller than the first one.
Pegatron began assembling the company’s latest iPhone 14 model in India, last November.
JP Morgan analysts have previously predicted that Apple will move 5 percent of global iPhone 14 production to India by late 2022 and expand its manufacturing capacity in the country to produce 25 percent (one in four) of all iPhones by 2025.
Pegatron it should be remembered was the firm that had suspended iPhone assembly at its Shanghai and Kunshan plants in China in April 2022, due to the Chinese government’s strict Covid-19 protocols.
That said, China will remain the principle production country for many Apple suppliers, as evidenced when Foxconn recently announced it would expand its presence in the central Chinese city of Zhengzhou, following disruption at its main iPhone production plant late last year.
But Apple is seeking to move some production away from China, as evidenced in September 2022 when Apple admitted that it had begun manufacturing some of its iPhone 14 handsets in India.
That move came as tech manufacturers explored alternative production sources away from China – amid Beijing’s ongoing geopolitical tensions with Western nations, coupled with its strict pandemic restrictions that disrupted supply chains for many industries.
Apple has already moved some of its iPhone manufacturing out of China to other countries, most notably India, where it started manufacturing the iPhone 13 earlier in 2022, and was also considering assembling iPad tablets there as part of its diversification strategy.
That said, Apple had been manufacturing lower-end iPhones in India since 2017, first via Wistron Corp and later by Foxconn – as it worked with the Indian government’s push for local manufacturing.
Pegatron currently accounts for 10 percent of Apple’s iPhone production in India on an annualised basis, research firm Counterpoint reportedly said.
In August 2022 it was reported that Apple had begun talks with two of its suppliers (Luxshare Precision Industry and Taiwan-based Foxconn, otherwise known as Hon Hai Precision Industry Co Ltd) about manufacturing the Apple Watch and Macbook in Vietnam.