(Bloomberg) – Apple Inc. assembly partner Pegatron Corp. is making preparations for its first plant in India, adding to a large influx of foreign technology investments in the country this year.
In June, the Indian government established a $ 6.6 billion plan to appeal to the world’s top smartphone manufacturers, offering financial incentives and ready-to-use manufacturing groups. Pegatron is now establishing a local subsidiary and joining Taiwanese electronics assemblers Foxconn Technology Group and Wistron Corp., which have already been manufacturing some iPhone phones in South 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 his peers, he will settle in South India, according to a person familiar with his plans who asked not to be identified. Foxconn, also known as Hon Hai, and Wistron are seeking to expand their operations in the country, and Pegatron’s entry may be seen as a defensive move to protect their share of the iPhone manufacturing budget, according to Matthew Kanterman of Bloomberg Intelligence.
What Bloomberg Intelligence Says
Pegatron could maintain its iPhone SE assembly market share, which may have grown from a 50-50 split with Hon Hai.
– Matthew Kanterman, analyst
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India has seen an increase in domestic investment in recent weeks, with Google, Facebook Inc. and others investing nearly $ 20 billion in Jio Platforms Ltd., the mobile internet company of billionaire Mukesh Ambani. Google has pledged to spend $ 10 billion over the next five to seven years to accelerate India’s digital transition, and Amazon.com Inc. has said it intends to export $ 10 billion of products made in India for 2025. When Jeff Bezos visited the country in January he said: “The 21st century will be the Indian century.”
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The country offers a large amount of skilled labor, as well as an internal market of one billion mobile connections. However, only around half of them are smartphones, leaving untapped potential that is attractive to growth-hungry global brands like Apple, Samsung Electronics Co., Xiaomi Corp., and Oppo. For assemblers like Pegatron, exports would also be an attractive opportunity, especially at a time of worsening trade relations between Washington and Beijing, making a diverse geographic base imperative.
Smartphones are a focal point for Prime Minister Narendra Modi’s much-touted Make in India program. Ravi Shankar Prasad, India’s minister of information technology and electronics, 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 that India not only wants the “groom” but also the “wedding procession”.
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India will become a global manufacturing hub for both components and the full suite of smartphones and other devices, said Pankaj Mohindroo, president of the Indian Association of Cellular and Electronics. The three dozen members of the group include Apple, Foxconn, Google, Wistron, Oppo, and others.
“The focus is shifting from going to India to exports and the $ 400 billion manufacturing of electronics that India is targeting by 2025 will be dominated by exports,” Mohindroo said by phone from New Delhi.
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