Disruption at Pegatron plant unlikely to affect iPhone production in India

Insiders say it will also not affect availability of the newly-launched iPhone 15, iPhone 15 Plus

Even as top Pegatron executives went to the factory near Chennai on Tuesday to make an assessment of the fire damage to decide on a possible date for resuming operations, sources said the impact of the closure will be minimal for Apple’s iPhone production. Late in the evening sources said that the factory might be operational soon-but said they are waiting for a final update. 
 

It will also not impact the availability of the newly-launched iPhone 15 and iPhone 15 Plus, they said.

Pegatron, which is one of the three vendors making iPhones, had to close operations from Sunday night after a fire broke out in its factory. On Monday, the local police as well as the fire department also came to check the damages.

Those assessing the ramifications of the production hit, estimate that the impact would be 0.1 per cent of the total annual iPhone production if the factory remains closed for 4-5 days. The figure could increase if there’s a further delay in resuming production.

Pegatron is the smallest iPhone assembler, with Foxconn Hon Hai being the dominant player, handling approximately 50 per cent of the iPhone assembly in India.

Currently, Foxconn is the sole producer of the newly-launched iPhone 15 and 15 Plus models in India. On the other hand, Pegatron has focused on assembling older iPhone models, including the iPhone 13 and 14, according to sources.

Sources also point out that there is enough stock available to ensure there is no disruption.

Counterpoint data indicates that Pegatron assembles about 10 per cent of the iPhones in the country, although other sources suggest a larger share.
 

In terms of exports as well, Pegatron trails. S&P Global data reveals that it exported iPhones worth $1.36 billion in 2022-23 (FY23), compared to $2.06 billion by Foxconn and $1.98 billion by Wistron. Pegatron’s share of total exports stands at a mere 25 per cent.

The fire was discovered on Sunday night and Pegatron issued a statement on Monday. It said there was a “spark incident” that will not have a significant financial or operational impact.

Sources said even if all the three suppliers had similar capacities, the fire’s impact would not exceed 0.36 per cent of India’s total iPhone production.

If the Pegatron’s facility stays closed for seven days, it would affect only 0.6 per cent of the overall production.

Retailers affiliated to Apple Inc. said that the company maintains a four-week stockpile. So, they foresee no issues.

This is not the first disruption at an iPhone assembly facility. Foxconn also temporarily shut its plants following worker protests due to a food poisoning incident.