Pegatron starts iPhone factory in Chennai, third company in India

Taiwanese Pegatron on Friday became the third Apple supplier to set up a manufacturing facility in India and inaugurated a facility at Mahindra World City in Chennai. It will invest about Rs 1,100 crore in the unit and potentially generate about 14,000 jobs.

The other two Apple vendors with units in India are Foxconn and Wistron, both Taiwanese. The Pegatron facility comes at a time when Apple is expected to move at least a quarter of its manufacturing facilities to India by 2025. In February last year, it signed a Memorandum of Understanding (MoU) with the government of Tamil Nadu.

“The fact that Pegatron started production within 18 months of signing the MoU underlines the investor-friendly climate in Tamil Nadu. China is where new cell phone models are manufactured in bulk. We are working to change that and make Tamil Nadu such a production center,” said the chief minister of Tamil Nadu, MK Stalin.

The electronics major has applied for the government’s production-related incentive scheme. Tamil Nadu plans to develop Hosur, Coimbatore and Sriperumbudur as hubs for electronics manufacturing.

The state contributes about 20 percent of the country’s electronics production. Major players in the state include Samsung, Foxconn, Tata Electronics and Dell among the major investors. Stalin said the state is working to improve the supply chain.

“In addition to conventional industries, we are showing an interest in innovative industries. Under industry 4.0, the electronics sector plays a very important role. It has the power to change the state’s production map. That’s what we’re focusing on,” he says. At the beginning of this year, Tamil Nadu jumped to third place in terms of ease of doing business, compared to 14 last year.

Stalin reiterated the government’s roadmap to achieve the goal of a $1 trillion economy. To achieve this, the state gives special incentives to the manufacturing sector. “In every sector, we are making efforts to create more jobs and drive diversification initiatives,” he added. Apple had started assembling iPhones locally in 2017, making mostly old-generation phones in India.

As China-focused manufacturing is a step towards diversification, the US company is reportedly considering making 25 percent of its handsets in India by 2025 and moving 5 percent of global iPhone 14 production to India by the end of 2022.