Pegatron looks for iPhone assembly expansion outside China

Taiwan-based Pegatron, which assembles iPhones for Apple, is focusing on expansion in other countries, in the wake of China’s recent lockdowns to control the spread of COVID-19.
Pegatron production facilityPegatron, the second largest contract manufacturer for iPhones, earlier indicated that it would produce Rs 8,000 crore worth of products from India.

Pegatron in April suspended operations at its Shanghai and Kunshan plants in China due to strict COVID-19 protocols, impacting production and deliveries. China has since lifted those restrictions, Reuters news report said.

Apple expects the manufacturing schedule and initial production volumes of the new phones to be hurt, the Nikkei business daily reported earlier.

Pegatron, however, is facing labour shortages, exacerbated by COVID restrictions in China, leading the company to emphasise its expansion plans elsewhere, Pegatron President Liao Syh-jang told an annual shareholder meeting in Taipei.

“We faced COVID controls for two months. We couldn’t have assessed that in advance, so that makes me emphasise our expansions in Vietnam, India, Indonesia, and North America, to solve our labour shortage, the gap between peak and low seasons, and to increase the utilisation of our production capacity.”

In recent years, Pegatron has sought to expand its footprint in Southeast Asia and North America.

Chairman T.H. Tung added that their customers had different reasons for setting up factories in Vietnam, India and Mexico.

“But one shared factor is the ability to reduce concentration in Shanghai, Suzhou, Chongqing,” Tung said, adding that recruiting staff in China has become increasingly difficult over the past seven to eight years.

Taiwanese firm Foxconn, the world’s largest contract electronics maker which also assembles iPhones, last month predicted more stable supply in the second half of 2022.