Pegatron starts iPhone factory in Chennai, third such firm in India

Apple expected to move at least a quarter of its manufacturing facilities to India by 2025

Taiwan’s Pegatron on Friday became the third Apple vendor to set up a manufacturing unit in India, inaugurating a facility at Mahindra World City in Chennai. It will invest around Rs 1,100 crore in the unit, potentially generating around 14,000 jobs.

The other two Apple vendors with units in India are Foxconn and Wistron, both Taiwanese. Pegatron’s facility comes at a time when Apple is expected to move at least a quarter of its manufacturing facilities to India by 2025. It signed a memorandum of understanding (MoU) with the Tamil Nadu government in February last year.

“The fact that Pegatron has started production within 18 months of signing the MoU highlights the investor-friendly climate in Tamil Nadu. China is where new cell phone models are manufactured in bulk. We are working to change that and make Tamil Nadu such a manufacturing hub,” said Tamil Nadu chief minister M K Stalin.

The electronics major applied for the central government’s production-linked incentive scheme. Tamil Nadu plans to develop Hosur, Coimbatore and Sriperumbudur as electronics manufacturing hubs.

The state contributes to around 20 per cent of the country’s electronics manufacturing. Major players in the state include Samsung, Foxconn, Tata Electronics and Dell among major investors. Stalin said the state is working to improve supply chain.

“Beyond conventional industries, we are showing interest in innovative industries. Under industry 4.0, the electronics sector plays a very important role. It has the power to change the manufacturing map of the state. We are focusing on that,” he said. Early this year, Tamil Nadu jumped to the third place in terms of ease of doing business, compared to 14 last year.

Stalin reiterated the government’s roadmap to achieve the target of a $1 trillion economy. To move towards this, the state is giving special incentives for the manufacturing sector. “In every sector, we are taking efforts to create more employment and boost diversification initiatives,” he added. Apple had started local assembly of iPhones in 2017 and was majorly making old generation phones in India.

A report by JP Morgan said Apple, in a move to diversify its China-focused manufacturing, is looking at making 25 per cent of its handsets in India by 2025 and shifting 5 per cent of global iPhone 14 production to India by the end of 2022.