Wistron in troubled waters: Apple steps in, no change in 2021 schedule

Topics Wistron | Apple

Apple is leaving nothing to chance after its long-term supplier Wistron got itself into troubled waters.

From making adequate security arrangements at all its manufacturing locations across India, to drawing a long-term labour supply contract with the authorities, the iPhone and MacBook maker has rushed in an army of mediators to nip the crises in the bud.

Since the incident at one of Wistron’s largest manufacturing facilities near Bengaluru — which assembles the newly launched iPhone SE — Apple has formed multiple teams to secure a long-term resolution, said people in the know.

While members of the teams have been selected from its present army of professionals in the country, a group of remotely located executives have been roped in for guidance.

A small group of Apple insiders, with work experience in China, are on alert for any virtual assistance that they can offer to the local members.

Further, a high level meeting of officials took place on Tuesday in New Delhi, to decide the future course of action with respect to the unrest at the Karnataka plant.

Apple is not new to workers’ agitation, neither are its global suppliers Foxconn, Wistron and Pegatron. Repeated allegations of violation of labour rights have surfaced against its giant suppliers since 2010 in China, where majority of Foxconn’s iPhone production lines were.

In the last decade, however, original equipment manufacturers (OEMs) have steered clear of any big crisis that could disrupt Apple’s supply of iPhones and Macs.

According to sources, a team of labour law experts from its OEMs and Apple are closely looking into the matter as India's labour laws are undergoing massive transformation.

In spite of concerns at various quarters about the negative impact it may have on India's recent efforts in attracting global manufacturers, Apple is confident that it will survive the crisis.

According to a person privy to the developments, the management is confident that Wistron will not alter its long-term investment plans in India.

“It has already invested large sums and is in an advanced stage to expand production capacity and capabilities. No question of it backing out due to one such incident,” said the person.

The Taiwanese contract manufacturer has pegged its losses from Friday’s attack at Rs 437 crore. However, internal estimates have shown the amount to be miniscule compared to Wistron’s financial muscle, sources told Business Standard.

“Wistron can easily absorb the losses, given that it has long-term commitments in India. The plan is to move a significant manufacturing base from China to India and that means multi-billion dollar revenues and profits over the years. The current losses are not a major factor,” said another person.

Apple’s immediate intervention in the matter has helped it control any potential damage for now. Its production plans for 2021 are untouched. Wistron, which has been ramping up its capacity and iPhone production base by preparing to add new models in 2021, is unlikely to change, they said.

The company is currently manufacturing two iPhone models — iPhone SE (launched globally in April) and iPhone 7 (from 2017). According to plans, Wistron is likely to add at least one new iPhone model by May next year.

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