Apple supplier Pegatron in talks to open second India factory

Apple supplier Pegatron in talks to open second India factory

Two sources who have direct knowledge of the matter said Apple Inc's Taiwanese supplier Pegatron Corp is in talks to open a second India factory as the U.S. 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, according to sources who sought anonymity as the talks are private.

The first source said the new factory is to assemble the latest iPhones. Pegatron didn't want to comment but said any acquisition of assets would be disclosed based on regulations. Apple didn't respond to a request for comment.

India is seen as the next growth frontier for Apple. Between April 2022 and February this year, around $9 billion worth of smartphones have been exported from India, and iPhones accounted for more than 50 per cent of that, according to the India Cellular and Electronics Association.

The research firm Counterpoint said that Pegatron currently accounts for 10 per cent of Apple's iPhone production in India.

Apple and its key suppliers have been shifting production away from China as they try to avoid a potential hit to business from mounting Sino-U. Pegatron has been looking to expand its footprint in Southeast Asia and North America in the last few years.

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

Pegatron's planned investment outlay isn't immediately clear. The new factory will be smaller than the first, according to the first source.

Apple Inc. has been a big player in 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 plans to assemble iPad tablets and AirPods.

India's Karnataka state said this week it has approved $968 million investment by Foxconn, leading to the creation of 50,000 jobs.

After winning a contract last week, Foxconn plans to build a $200 million factory in India to produce wireless earphones for Apple. It already assembles some iPhone models at its plant in Tamil Nadu.