Nod to Apple's Chinese suppliers may ring in jobs for Sriperumbudur

Among the 14 firms to have got initial go-ahead is Luxshare with a unit in the town near Chennai

By the busy Chennai-Bengaluru national highway, where construction work is causing roadblocks these days, a board reads: “Welcome: Luxshare India Private Ltd.''

Local residents say until about two months ago, this board carried the name of Motorola, which once had a manufacturing unit in Sriperumbudur, 40-odd km from Chennai in Tamil Nadu.

In May 2020, Luxshare Precision Industry Co, a China-headquartered AirPods and iPhone assembler, had entered into a deal with the Tamil Nadu government to take over the defunct Motorola unit. The company had also lined up an investment of Rs 750 crore for the unit, and now, two years later, things are finally beginning to move for it.

Luxshare is reportedly among Apple Inc’s 14 Chinese suppliers that have received initial clearance from the Indian government to operate in the country.

For Sriperumbudur, which already hosts a leading contract manufacturer of Apple devices in Foxconn, this is good news for the jobs it will potentially generate. The Foxconn unit is barely half a kilometre away from Luxshare’s.

Currently, the three Apple iPhone manufacturers with units in India are Taiwanese players Foxconn, Wistron (factory in Karnataka) and Pegatron (Mahindra World City, Chennai).

And while there are about 190 Apple suppliers globally, as of now only 12 have manufacturing facilities in India.

Meanwhile, at the Luxshare unit, besides some two-wheelers and a few cycles that are parked outside, all is quiet.

A person at the site, who does not wish to be named, says currently the unit does not have very many employees – “around 10-20”. With the government giving an initial go-ahead, work might begin here in the next couple of months, he adds.

“Nothing is happening at the moment,” says a security guard at the unit. “There is no official present.”

The Motorola unit was shut down in 2012 by its then parent Google. And in 2014, Lenovo bought Motorola, but all efforts to revive the unit failed. Then in 2020, Luxshare signed the deal to take it over.

A source tells Business Standard that as of now, there are no plans in place for assembling AirPods or entry-level iPhones at the unit.

Luxshare did not respond to queries from Business Standard on the development.

As part of its strategy to diversify its supply chain out of China, Apple Inc is reportedly planning to triple its iPhone production in India, which would make the country a supply hub for the American company.

Foxconn had recently announced investment plans of $500 million in Sriperumbudur. Following this, there were reports that it might add 15,000-plus jobs at the Sriperumbudur unit.

In September, Pegatron became the third Apple vendor (after Foxconn and Wistron) to set up a manufacturing unit in India. It has invested around Rs 1,100 crore to set up a facility at Mahindra World City in Chennai and this unit will potentially generate around 14,000 jobs.

For Chinese companies like Luxshare Precision Industry Co and a unit of lensmaker Sunny Optical Technology Group, which have got the government’s preliminary approval, there might still be bottlenecks ahead. These firms would have to find local Indian joint venture partners to forge ahead.

The Applecart

• In 2020, Luxshare signed a deal with Tamil Nadu to take over the defunct Motorola unit
• Foxconn had announced investment plans of $500 mn in Sriperumbudur
• Pegatron invested around Rs 1,100 cr to set up a facility in Chennai
• The company had also lined up an investment of Rs 750 crore for the manufacturing unit in Sriperumbudur, nearly 40 km from Chennai in Tamil Nadu
• Three iPhone manufacturers with units in India are Foxconn, Wistron and Pegatron