Apple Inc assembly partner Pegatron Corp (和碩) is making preparations for its first plant in India, adding to a large influx of foreign tech investments in the country this year.
Last month, the Indian government set out a US$6.6 billion plan to woo the world’s top smartphone manufacturers, offering financial incentives and ready-to-use manufacturing clusters.
Pegatron is now setting up a local subsidiary and joining fellow Taiwanese electronics assemblers Hon Hai Precision Industry Co (鴻海精密) and Wistron Corp (緯創), who have already been making some iPhone handsets in southern India.
With a number of factories in China, Pegatron is the second-largest iPhone assembler and depends on Apple for more than half of its business. Like its peers, it would set up in the south of India, said a person familiar with its plans who asked not to be named.
Hon Hai, also known as Foxconn Technology Group (富士康科技集團), and Wistron are looking to expand their operations in the country, and Pegatron’s entry could be seen as a defensive move to protect its share of budget iPhone manufacturing, Bloomberg Intelligence analyst Matthew Kanterman said.
Pegatron could uphold its iPhone SE assembly market share, which might have grown from a 50-50 split with Hon Hai, Kanterman said.
India offers a vast pool of skilled labor as well as a domestic market of a billion mobile connections. Only about half of those are smartphones, leaving untapped potential that is attractive to growth-hungry global brands like Apple, Samsung Electronics Co, Xiaomi Corp (小米) and Oppo Mobile Telecommunications Corp (歐珀).
For assemblers like Pegatron, exports would also be an enticing opportunity, especially at a time of worsening trade relations between Washington and Beijing making it imperative to have a diverse geographic base.
Smartphones are a focal point for Indian Prime Minister Narendra Modi’s much-touted Make in India program. Indian Minister of Electronics and Information Technology Ravi Shankar Prasad has said the goal is for brands and manufacturers to transport the entire supply chain to the country, not just the end-stage assembly.
Quoted by local media, Prasad said India wants not only the “bridegroom” but also the “wedding procession.”
India would become a global manufacturing hub for both components and the complete assembly of smartphones and other devices, said Pankaj Mohindroo, chairman of the Indian Cellular & Electronics Association.
The group’s three dozen members include Apple, Hon Hai, Google, Wistron, Oppo and others.
“The focus is shifting from making for India to exports and the $400 billion electronics manufacturing that India is targeting by 2025 will be dominated by exports,” Mohindroo said by telephone from New Delhi.
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