Apple's Tough Price Negotiation Forces Wistron to Exit Indian Market

According to Indiatimes sources, Wistron, the first company to produce iPhones in India, has withdrawn from the Apple foundry business in the country due to Apple’s tough price negotiation. The decision was made due to the company’s inability to make a profit as a result of Apple’s stringent price demands. While Wistron initially played an important role in iPhone production in India, subsequent entrants such as Foxconn and Pegatron established their own manufacturing plants in the country, focusing on the production of the latest flagship models. According to reports, India is expected to manufacture 25% of all iPhones by 2025, increasing to 50% by 2027.

Wistron, on the other hand, has decided to exit this market. Wistron has already decided to sell its iPhone assembly facility near Bengaluru and shift its focus to other ventures, according to insiders and personnel cited by Indiatimes. According to one insider, Wistron’s Apple business in India was not profitable, and attempts to negotiate higher profit margins with Apple were unsuccessful due to the company’s limited leverage in comparison to global giants like Foxconn and Pegatron.

Wistron’s Apple division in India also encountered internal difficulties. In 2020, riots broke out at the company’s Bengaluru factory as employees protested low wages, resulting in significant financial losses and inquiries from Apple and the Indian government. Wistron was found to have committed numerous labour law violations, including unpaid wages and other issues, according to government investigations. As a result, Apple terminated its collaboration with Wistron and placed the company under investigation.

Despite being the first to manufacture iPhones in India, Wistron remains the smallest of the three major foundries involved. As a result, its impact on Apple’s goal of increasing iPhone production in India is relatively minor. Luxshare, which was initially contracted to manufacture premium iPhone models, is said to have purchased Wistron’s two original iPhone plants. Furthermore, Wistron intends to sell its third plant, with recent reports indicating that Tata Group is in the process of acquiring it. While the agreement has not yet been finalized, the report indicates that Tata Group has already hired top-level personnel to manage the “new” factory. This Chinese-hired staff may have difficulty adjusting to the local work culture. Furthermore, the factory’s location, about 25 miles from the city, is plagued by poor road conditions, heavy traffic, and difficult commuting conditions, making it difficult to recruit local management.

Wistron India has recently encountered a number of challenges. A major labour protest erupted in December 2020 at the Wistron India factory in Narasapura, near Bangalore. Workers at the facility complained about long work hours and late pay. Vehicles and essential equipment were damaged as a result of the violent protest. Following the incident, the Karnataka state government launched an investigation into Wistron India’s labour practices. The investigation uncovered numerous labour law violations, including nonpayment of wages and insufficient working conditions. As a result, the Karnataka state government removed Wistron India from the list of approved firms, and the company was forced to revise its hiring practices.

In addition to labour issues, Wistron India has been chastised for its environmental practices. In 2019, the Karnataka State Pollution Control Board fined the company for violating environmental regulations. The board discovered that Wistron India had been dumping untreated waste into a nearby aquifer, causing pollution.

Overall, Wistron’s challenges in India, which included an unprofitable Apple business, labour disputes, labour law violations, environmental concerns, and the subsequent loss of key contracts, prompted the company to exit the market and sell off its iPhone assembly facilities.