Wistron Steps Back from Apple iPhone Assembly Business: A Shift in Global Supply Chains?

On April 20th, news surfaced that Wistron Corporation, a multinational electronics contract manufacturing company, decided to shutter its factory in Taizhou, Jiangsu, China. Established in 2009 with an investment of a staggering $1 billion, the factory served as a major OEM (Original Equipment Manufacturer) hub for various global laptop and smartphone brands.

Today, the Economic Times of India reported that Wistron has ceased its collaboration with Apple Inc., no longer manufacturing iPhones for the tech giant. The report also states that the company is selling its only Indian factory, located in Bangalore, which was primarily dedicated to iPhone assembly.

This shift, from painstakingly acquiring Apple's orders to ceasing cooperation, is attributed by Wistron to an unfavorable profit margin while working with Apple. Despite negotiations, a suitable resolution could not be reached. Wistron employees and industry insiders indicate that the company has been considering this move, citing lack of long-term profitability in pure product assembly.

While Apple's main OEM remains Foxconn, Wistron received a portion of orders to assemble the iPhone SE in China. At Apple's behest, Wistron and Pegatron established factories in India, resulting in orders but relatively low quantities and profits.

This may shed light on Wistron's previous payment issues in its Bangalore factory. In 2020, the factory experienced a riot due to payment delays and attempts to reduce employee wages, causing significant unrest among workers. Investigations by Indian authorities revealed serious labor law violations at Wistron's Bangalore factory, including wage withholdings.

The pertinent question now is whether Wistron's exit from iPhone manufacturing will impact Apple. The consensus seems to be that there will be negligible impact, given that Apple's orders to Wistron were already minimal. Meanwhile, Luxshare Precision has risen to become a top-tier supplier, on par with Foxconn, and is currently in charge of producing Apple's iPhone flagship models.

A new competitor in this scenario is the homegrown Indian conglomerate Tata Group. Tata is reportedly on the verge of acquiring Wistron's factory in an attempt to infiltrate the iPhone supply chain. If these reports are accurate, Tata Group may soon emerge as one of the main iPhone manufacturing hubs, marking a significant shift in global supply chains.