Apple supplier Wistron is selling its iPhone assembly factory in India because Apple's terms prevent it from making a profit in the region.
A report on May 2 had suggested Wistron was gradually scaling down a majority of its operations in India and would to withdraw a significant portion of its presence from the country within the following year. The move is now official, according to India's Economic Times which spoke to company executives.
Wistron has been considering an exit strategy due to a lack of long-term profitability in solely functioning as an assembly provider for the iPhone. Instead, the company plans to focus on its core IT manufacturing operations in countries such as Vietnam and Mexico.
"Wistron has not been able to make any money from the Apple business in India," an executive said. "It has tried to negotiate with Apple for higher margins, but being a smaller player as compared to Foxconn and Pegatron globally, it did not have the necessary leverage."
Despite Wistron's role in assembling the iPhone SE and other models for Apple in India, the company faced challenges in achieving profitability. Unlike larger suppliers such as Foxconn and Pegatron, which handle inventory management for Apple in the country, Wistron could not establish itself in that particular aspect of the business.
"There need to be systems in place to gauge demand and ship to various units, which Wistron lacked," said another executive. "Plus, it is a much smaller player as compared to Foxconn and Pegatron."
Some Wistron employees also said the company had had problems retaining workers at its facility in Kolar, India.
"There were a lot of management issues. China and India work in different ways, and they did not understand that," one employee said. "The mindset of Indian labourers are different, but they don't pay any heed, leading to a high rate of attrition."
Currently, Wistron is selling its iPhone assembly facility in Kolar, near Bengaluru, to the Tata Group. The Tata Group is presently conducting trials to assemble forthcoming iPhone 15 models in India.
Wistron established its presence in India in 2008 by opening a repair facility that serviced various devices it manufactured, including PCs, laptops, and servers. In 2017, the company expanded its operations and began manufacturing iPhones for Apple.