Pegatron Said to Be in Talks to Open Second Factory in Tamil Nadu

Apple’s Taiwanese supplier Pegatron is in talks to open a second India factory, said two sources with direct knowledge of the matter, as the US tech giant’s partners continue to diversify production away from China.

Pegatron plans to add a second facility near the southern city of Chennai in Tamil Nadu state, just six months after opening the first with an investment of $150 million (roughly Rs. 1,236 crore), said the sources, who sought anonymity as the talks are private.

The new factory, the first source said, is “to assemble the latest iPhones”.

Pegatron declined to comment but said, “Any acquisition of assets will be disclosed based on regulations.”

Apple did not respond to a request for comment.

India is seen as the next growth frontier for Apple. Around $9 billion (roughly Rs. 78,303 crore) worth of smartphones have been exported from India between April 2022 and February this year, and iPhones accounted for more than 50 percent of that, according to the India Cellular and Electronics Association.

Pegatron currently accounts for 10 percent of Apple’s iPhone production in India on an annualised basis, research firm Counterpoint said.

Apple and its key suppliers have been shifting production away from China as they seek to avoid a potential hit to business from mounting Sino-U.S. trade frictions. In recent years, Pegatron has sought to expand its footprint in Southeast Asia and North America.

The talks for starting a second Pegatron facility on lease are ongoing and it will be located inside Mahindra World City near Chennai, just around where the company inaugurated the first plant in September 2022.

Pegatron’s planned investment outlay for the expansion is not immediately clear. The first source, however, said the new factory will be smaller than the first one.

Apple has bet big on the South Asian nation since it began iPhone assembly in the country in 2017 via Wistron and later Foxconn, in line with the Indian government’s push for local manufacturing.

India is the second biggest smartphone market in the world, where Apple also plans to assemble iPad tablets and AirPods.

India’s Karnataka state said this week it has approved a $968 million (roughly Rs. 7,978 crore) investment by Foxconn, leading to the creation of 50,000 jobs.

Last week, Reuters reported Foxconn has plans to build a $200 million (roughly Rs. 1,648 crore) factory in India to produce the wireless earphones for Apple after winning a contract. It already assembles some iPhone models at its plant located in Tamil Nadu.

© Thomson Reuters 2023