Wistron looks to invest $1 bn to set up PCB manufacturing unit in Bengaluru

Move comes at a time when India has increased customs duties on several electronic components and PCs to aid value-added local electronics manufacturing

Wistron, one of the leading Taiwanese contract manufacturers, is looking at relocating a printed circuit board (PCB) manufacturing plant from China to Bengaluru, entailing an investment of around $1 billion (about Rs 64 billion). Said to be one of the biggest investments in the hardware manufacturing space in the country, the proposed plant is expected to provide employment to 3,000-4,000 people. 

The unit would manufacture motherboards for low-cost personal computers (PC) that will be based on chipmaker Intel’s reference designs. Wistron could also manufacture Intel’s upcoming LTE (long-term evolution, a standard for high-speed wireless communication) on PC boards for which India could be a major market, said two people familiar with the development.

Business Standard had reported on January 8 that Wistron was already eyeing setting up an integrated smartphone manufacturing unit in the city as it looked to move beyond just assembling Apple’s iPhone SE. Lacklustre sales of the Apple device have forced the company to look for newer avenues to grow its business here.

The move comes at a time when India has increased customs duties on several electronic components that go into smartphones and PCs to aid value-added local electronics manufacturing. While the share of fully-assembled smartphones imported into the country fell to just 26 per cent in 2017, the level of localisation still remains extremely low.

Key takeaways

• The proposed plant is expected to provide employment to 3,000-4,000 people

• Wistron could also manufacture Intel’s upcoming LTE on PC boards for which India could be a major market

• Wistron could shift one of its PCB manufacturing units from China to India due to the increasing cost of labour there

• Both Qualcomm and Intel are heavily investing in developing chips that support LTE wireless data technologies, eyeing sales of PCs in emerging markets such as India

One of the above-mentioned persons said that Wistron could shift one of its PCB manufacturing units from China to India due to the increasing cost of labour there. The average salary of a worker in China has risen to 3,900 CNY per month (approx Rs 40,000) or more than twice the average salary of workers in India.

In 2015, Wistron was hauled up by DanWatch, a Danish human rights research group, which found that the company was forcefully employing illegal student labour in its factories in China. The revelation had led to PC makers Dell and HP, which were buyers from Wistron, to suspend the use of interns on their production lines.

This issue has continued to hound Wistron which supplies motherboards to the world largest PC makers Dell, HP and Lenovo. While Wistron’s proposed India PCB unit will feed local demand for PCBs, it will also export components to feed assembly lines for low-cost PCs which utilise these Intel referenced motherboards.

While Intel said it would not like to comment on queries sent by Business Standard, an email sent to a Wistron spokesperson on January 31 did not elicit any response.

Both Qualcomm and Intel are heavily investing in developing chips that support LTE wireless data technologies, eyeing sales of PCs in emerging markets such as India. Partnering with Wistron, Intel could gain a price advantage in the Indian market by locally manufacturing the motherboards that uses these chips.

“Now people are beginning to say that PC sales in India did not kick off due to lack of broadband connectivity in the country. With the spread of 4G, laptops with built-in SIM cards could find many takers and that’s the thesis Intel and Qualcomm have come up with,” said the second person who did not wish to be named.

An industry analyst that consults both Intel and Wistron said that investing $1 billion would be very easy if the companies were looking at locally manufacturing PCBs. He said that an assembly line with a few hundred workers or importing five large automated PCB manufacturing devices could easily require more than $1 billion in investments.