Apple Inc supplier Pegatron is in talks to open a second factory in India – sources

NEW DELHI, March 24 (Reuters) – Apple Inc’s (AAPL.O) Taiwanese supplier Pegatron Corp (4938.TW) is in talks to open a second factory in India, said two sources with direct knowledge of the matter, as the US tech giant partners continue to diversify production outside of China.

Pegatron plans to add a second facility near the southern city of Chennai in Tamil Nadu state just six months after the opening of the first with a $150 million investment, said the sources, who sought anonymity because the conversations are private.

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

Pegatron declined to comment, but said “Any asset acquisition will be disclosed on a regulatory basis.”

Apple did not respond to a request for comment.

India is seen as the next growth frontier for Apple. According to the India Cellular and Electronics Association, about $9 billion worth of smartphones were exported from India between April 2022 and February this year, and iPhones accounted for more than 50% of that.

Pegatron currently accounts for 10% of Apple’s iPhone production in India on an annual basis, according to research firm Counterpoint.

Apple and its key suppliers have moved production out of China to avoid a potential blow to trade between China and the US. In recent years, Pegatron has sought to expand its footprint in Southeast Asia and North America.

Talks to launch a second rental Pegatron facility are underway and it will be located at Mahindra World City near Chennai, just around where the company inaugurated its first factory in September 2022.

Pegatron’s planned capital expenditures for the expansion are not immediately clear. However, the first source said the new plant will be smaller than the first.

Apple Inc has been betting big on the South Asian nation since it began iPhone assembly in the country through Wistron and later Foxconn (2317.TW) in 2017, in keeping with the Indian government’s push for local manufacturing.

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

The Indian state of Karnataka said this week that it has approved a $968 million investment by Foxconn leading to the creation of 50,000 jobs.

Last week, Reuters reported that Foxconn has plans to build a $200 million factory in India to produce the wireless earphones for Apple after winning a contract. It already assembles some iPhone models at its factory in Tamil Nadu.

Reporting by Munsif Vengattil and Aditya Kalra in New Delhi, and Praveen Paramasivam in Chennai; Additional reporting by Sarah Wu in Taipei, Stephen Nellis in San Francisco, and Aditi Shah in New Delhi; Edited by Muralikumar Anantharaman

Our Standards: The Thomson Reuters Principles of Trust.

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