Apple supplier Pegatron's iPhone factory finally becomes operational in Chennai

Taiwan-headquartered Pegatron, one of Apple’s contracted manufacturers of the iPhone, has invested ₹1,100 crore to set-up a new mobile phone manufacturing facility in the Mahindra World City business area of Chengalpattu district near Chennai. Through this investment, the company projects to generate 14,000 jobs in the factory — in line with the memorandum of understanding that the company signed with the Tamil Nadu state government in February last year.

The factory adds to other manufacturing facilities that fellow Taiwanese contract manufacturers, including Foxconn and Wistron Corp, have already set-up in India. MK Stalin, chief minister of Tamil Nadu, added at the inauguration of the Pegatron plant that the state accounts for 20% of all electronics manufacturing and assembly in the country.

These facilities have added to the volume of devices that are assembled locally, which includes the likes of Apple’s iPhones. On Monday, Apple confirmed that it has started assembling its latest generation iPhones in India as well — the first time that the company has started making its phones domestically right after the global unveiling.

On September 21, analysts at financial and investment services firm JP Morgan said that Apple’s move to diversify its iPhone manufacturing ecosystem, in light of the prevalent geopolitical relations between the US and China, could see the company move up to 5% of its manufacturing to India by end-2022. By the end of 2025, one out of every five iPhones may be made in India.

Speaking at the inauguration, Rajeev Chandrasekhar, minister of state for information technology, said that facilities such as Pegatron’s latest factory can help India increase its domestic electronics manufacturing revenues to $300 billion by FY26 — up from $75 billion at present. He further added that incentivizing local manufacturing has drawn global investments of ₹6,500 crore, adding 40,000 jobs and creating ₹50,000 crore worth of mobile phone exports since 2015-16.

On August 29, a report by industry body India Cellular and Electronics Association (ICEA) and policy think tank Indian Council for Research on International Economic Relations (ICRIER) said that India’s overall electronics export reached $16 billion in FY22, with mobile phones accounting for about one-third of the total electronics export.

By March 2023, the report projected smartphones to account for at least 50% of the overall electronics export — which could reach $21-25 billion. By FY26, the union government estimates India’s electronics exports to reach $120 billion.