According to sources, contract manufacturer Pegatron is in talks to lease a second factory near Chennai, India, to assemble the latest iPhones, as it looks to move some of its production away from China. This comes six months after the Taiwanese manufacturer opened its first manufacturing facility in the same area, which involved an investment of $150 Mn. The new facility is likely to be smaller than the first one, but there is no clarity on the budgetary implications of the project. Apple and its contract manufacturers are setting up a base in India due to concerns over growing geopolitical tensions between the US and China, as well as attractive production-linked incentives offered by the Indian government to spur the local manufacturing ecosystem.
Pegatron declined to comment on the matter. It seems that Apple is heavily investing in India to scale up its production facilities and increase its iPhone production in the country. Pegatron, Wistron, and Foxconn are among the contract manufacturers that have made significant investments in India to manufacture Apple products. Pegatron, in particular, accounts for 10% of Apple’s iPhone production in India annually and aims to increase this number further. Apart from Pegatron, other Apple vendors such as Foxconn, Jabil, and Salcomp are also expanding their operations in India to manufacture AirPods and their components. The move comes after Apple’s major rejig of its international management to focus on India and its plans to open its first retail store in Mumbai in April 2023. Moreover, Apple has exported iPhones worth more than $2.5 Bn from India between April and December 2022, indicating the company’s bullishness on the country. This move also comes amid growing rivalries between Beijing and Washington DC, indicating that Apple may be diversifying its manufacturing operations away from China.