Wistron, the Taiwanese contract manufacturer that makes iPhones for Apple in India, is set to invest Rs 682 crore on expanding operations, having got approval to acquire additional land near Bengaluru, a senior Karnataka minister said.
“The industries department had cleared Wistron’s proposal for about 43 acres in the state… they will invest about $100 million,” RV Deshpande, Karnataka’s minister of large, medium industries and infrastructure, told ET. The minister said earlier the company plans to make Apple smartphones in the new facility.
The Karnataka government issued a notification approving Wistron Infocomm Manufacturing’s proposed investment in the state to make smartphones, Internet of Things products and biotech devices. The project will come up at Narasapura Industrial Area in Kolar district, adjacent to Bengaluru district. Wistron claimed the project can create about 6,000 jobs, as per the notification.
Apple and Wistron did not comment on the matter. ET reported in January that the company had sought 40-50 acres from the state government for expansion.
“They’re ramping up for the long term, just like Foxconn is, and states are looking at these investments as big-ticket job generation opportunities. Manufacturing for Apple will be part of their expansion plans,” a senior industry executive said, asking not to be identified.
Wistron makes the iPhone SE globally for the Cupertino-based technology giant and has been assembling the device in India through its subsidiary ICT Service Management Solutions in the Peenya area of Bengaluru since early 2017.
Local manufacturing would allow Apple to expand its 2-3% share in India’s smartphone market amid slowing developed markets such as China and the US. The company led with a 44% share in the above-Rs 30,000 segment, as per January data from Counterpoint Technology Market Research.
Wistron’s rival Foxconn, the largest contract manufacturer in the world and among Apple’s leading suppliers, has been expanding in India and recently reiterated its commitment to invest $5 billion in neighbouring Maharashtra state.
Both companies would want a larger share in India, the fastest-growing smartphone market in the world. Local manufacturing would also give them tax benefits, analysts said. India increased import duty on mobile phones to 20%, putting importers such as Apple at a disadvantage against rivals Samsung and Xiaomi, which make almost all their models in India.
“Almost one-third of Apple’s sales came from iPhone 6 and previous generation models, which means by the time the new facility is out, the share of older generation iPhone 6 will fall further. So maybe it will be a wise move if Apple starts getting the iPhone 7 made in India as well to broaden its portfolio and eventually save on duties,” said Tarun Pathak, associate director at Counterpoint Research.
Apple, which has been negotiating – so far unsuccessfully – with the Indian government for tax breaks and incentives to expand operations, could look at making iPads and Mac personal computers in the country after both products showed record growth in the quarter ended December.
“Mac performance was particularly strong in emerging markets with unit sales up 13% year-over-year and with all-time record in Latin America, in India, Turkey and Central and Eastern Europe,” Apple chief financial officer Luca Maestri said on an earnings call last month.
Similarly, iPad sales growth was in strong double-digits in many emerging markets, including Latin America, the Middle East, Central and Eastern Europe and India, apart from Japan, Australia and Korea, he added. economictimes