Apple contractor throws in the towel in India

Wistron packs his bags. The Taiwanese group and subcontractor of Apple will stop embling iPhones in India and sell its factory in Kolar, located not far from Bangalore, the epicenter of Indian tech. A decision that comes as the other subcontractors of the apple firm increase their production in the subcontinent.

Wistron is the first Apple contractor to start embling iPhones in India in 2017. Currently, the Taiwanese embles 14, 13, 12 and SE models. But several difficulties have dissuaded the group from continuing its activities in the country.

Insufficient margins

“Wistron has not been able to make a profit from its production for Apple,” a company executive told the Indian daily “The Economic Times.” Wistron would have tried to convince Apple to entrust him with other tasks than the final embly of smartphones, which would have allowed the company to move up the value chain and increase its margins. But Wistron lacked leverage compared to Foxconn and Pegatron, two other Apple contractors in India. These ensure greater production for the American giant and therefore have greater bargaining power.

Moreover, Wistron was not in the odor of holiness with the leaders of the Cupertino company. In 2020, the Kolar factory had to suspend its activities because angry workers had vandalized the site, for damages estimated at 7.5 million euros. A police investigation had revealed that the company did not pay the salaries promised in the contracts, nor overtime, and was regularly late in payment.

Apple Disclaimer

Following these events, the American tech giant issued a warning to the Taiwanese company, urging it to take action if it wanted to continue to receive orders. “Wistron has always had management problems, and this has worried Apple, which is very careful in the choice of its partners”, comments Faisal Kawoosa, chief analyst at Techarc.

Wistron also reportedly struggled to retain workers because of an unsuitable corporate culture. “The Indians and the Chinese work differently, and that, they did not understand it”, explained an Indian employee to “The Economic Times”. “We regularly see Chinese and Taiwanese suppliers coming to the site. They work day and night. They have no social life. But Indian workers want to have a balance,” said another employee.

Wistron’s departure comes as Apple is increasingly betting on India to take over from China due to geopolitical tensions between Beijing and Washington. Apple’s contractors have already started to pick up the pace. Foxconn, which started manufacturing iPhone 14s in India last September, is reportedly preparing to build a factory to manufacture AirPods as well as a gigantic $700 million smartphone embly site in the Bangalore region. If the Indian authorities are to be believed, Apple would eventually like to ensure 25% of its iPhone production in India, compared to less than 5% today.