Tai­wan’s Wistron in limbo as Ap­ple over­es­ti­mates iphone SE de­mand

Mint Asia ST - - Inside - BY R OZELLE L AHA

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 un­der­uti­lized, 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 uti­liza­tion 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.

An Ap­ple spokesman in India did not re­spond to an email sent on 7 Septem­ber seek­ing com­ments. An email sent to Wistron re­mained unan­swered till press time.

Ap­ple con­tracted Wistron to as­sem­ble semi­knocked-down units to build iphone SE de­vices, for which the Tai­wanese com­pany set up the Bengaluru plant with an an­nual ca­pac­ity of around 75,000 units. The plant was to work in three shifts for 26 days a month, the per­son cited above said.

Ac­cord­ing to the con­tract 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 uti­liza­tion and cost struc­ture. Plans to ex­port phones also seemed to be stuck as the gov­ern­ment has not al­lowed duty-free im­port of com­po­nents.

“There is no pol­icy ba­sis for this and this is where the other prob­lem is. If the gov­ern­ment al­lows this, it will cre­ate a very messy sit­u­a­tion with so many other man­u­fac­tur­ers who never asked for this in the first place. Add to this, the GST and ad­min­is­tra­tive prob­lems for duty-free im­port un­der ex­ist­ing schemes,” the per­son said, adding that Wistron is cur­rently as­sess­ing its agree­ment with Ap­ple.

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