Wistron Corp in limbo as Apple overestimates iPhone SE demand
Tepid sales of Apple Inc’s iPhone SE in India and a failure to secure concessions from the government has put the company’s Taiwanese contract manufacturer Wistron Corp’s business plans in trouble.
Apple overestimated demand for its iPhone SE model in India, said a person with direct knowledge of the matter. Wistron’s production capacity at its plant in Bengaluru is about triple Apple’s sales for the iPhone SE model, a cheaper version of its flagship model which was aimed at emerging markets.
Local assembly of the iPhone SE did not help in reducing the cost of the device, thereby failing to improve demand. As a result, Wistron’s plant remained underutilised, the person said, requesting anonymity.
“iPhone SE model does not sell enough in India, barely enough to fill one shift for the factory. It doesn’t have enough demand, and Apple Inc. is thinking of adding in a high-selling model in addition to the current one to improve utilisation of the plant,”
the person said.
Apple has sought concessions on import duty for components to start full-scale production in India, demands that have not been met by the government so far. The stand-off has impacted Apple’s manufacturing plans.
Apple did not respond to an email sent on September 7 seeking comments for the story. An email sent to Wistron remained unanswered till press time.
Apple contracted Wistron to assemble semi-knocked-down units to build iPhone SE devices, for which the Taiwanese company set up the Bengaluru plant with an annual capacity of 75,000 units. The plant was to work in three shifts for 26 days a month, the person cited above said.
According to the contact manufacturing agreement, Wistron was to bear the initial cost of setting up and running the factory, the person said. In addition, said the person, there has been no clarity from Apple on its future investments, production volume, capacity utilisation and cost structure. Plans to export phones also seemed to be stuck as the government has not allowed dutyfree import of components.