Taiwan's Pegatron to manufacture Apple iPhones worth Rs 7,258 crore

Manufacturer to invest Rs 250 crore, recruit 5,700 employees in India in FY23

Taiwanese contract manufacturer Pegatron has committed a minimum production value of Rs 7,258 crore of Apple iPhones, Rs 250 crore of investment and the hiring of 5,700 employees and workers in FY23 as it gets ready to start commercial production within a few days.

FY23 will be the first year for Pegatron under the Production Linked Incentive (PLI) scheme for mobile devices. Sources say the factory will start with the production of the iPhone 12  and then move to the iPhone 13.    

Pegatron’s plans to set up the plant last year were stymied by the pandemic. It is the third vendor being used by Apple, in addition to contract manufacturers Foxconn Hon Hai and Wistron which have already become eligible for their first year of incentives under the PLI scheme which ended March 31st. Pegatron’s plant, like Foxconn’s, is in Tamil Nadu. Wistron’s factory is in Karnataka.    

Sources say that Pegatron will initially start with manufacturing the Apple 12, the workhorse in the domestic market and in exports. They also say that Pegatron will go beyond Rs 8,000 crore of production value in FY23 as this is the minimum to be eligible for the 6 per cent incentive under the scheme.

It is also expected to invest much more than the minimum which is mandatory in the first year. An e-mail to Apple did not elicit any response.

Being a new player in the country, Pegatron had made it clear in its initial application that it would not be able to start production in FY21 (the first year of the PLI scheme) and would claim only from FY22. However, due to the pandemic, the government extended the PLI scheme by one year which benefited Pegatron whose first year of production will now be FY23.

Pegatron is one of Apple’s leading contract manufacturers globally. It undertakes contract manufacturing in the areas of communication, computing and consumer electronics for branded vendors. It also manufactures motherboards, graphic cards, notebooks, gaming consoles, and set top boxes. The kicking off of the Pegatron plant will help Apple, through all three vendors, to hit a minimum production value of Rs 25,000 crore in FY23, though the maximum it can reach could go as high as Rs 35,000-Rs 40,000 crore.

In FY22, Wistron and Foxconn helped the company to export phones of over Rs 10,000 crore, apart from manufacturing for the growing domestic market. Their target for FY22 was only Rs 8,000 crore to get the incentive, a target they have crossed easily.  The big push from Apple vendors and from Samsung has helped India to increase exports of mobile phones in FY22 to $5.5 billion — a growth of 75 per cent over the previous year, said the India Cellular & Electronics Association.

Nonetheless, some serious issues in the PLI scheme need to be tackled. The pandemic has impacted homegrown players such as Lava and Optimus, among others, which are eligible for the PLI scheme but have not been able to avail themselves of it on account of failing to meet the production target, even though some of them have made the required investment.