Disruption at Pegatron plant unlikely to affect iPhone production in India

Pegatron, one of Apple Inc.’s three suppliers in India, halted iPhone production at its Chennai factory on Sunday night following a minor fire. However, this decision is unlikely to significantly affect iPhone production in the country. It is also not expected to impact the availability of the newly launched iPhone 15 and iPhone 15 Plus.

According to sources assessing the ramifications of a brief production halt, the disruption is estimated to be at most 0.1 per cent of the total annual iPhone production from its suppliers if the factory remains closed for 4-5 days. The figure could increase if there’s a more extensive delay in resuming production.

Pegatron is the smallest iPhone assembler, with the Foxconn Hon Hai facility being the dominant player, handling approximately 50 per cent of iPhone assembly. Currently, Foxconn is the sole producer of the newly launched iPhone 15 and 15 Plus models in India.

In terms of exports as well, Pegatron trails behind. S&P Global data reveals that it exported iPhones worth $1.36 billion in FY23, compared to $2.06 billion by Foxconn Hon Hai and $1.98 billion by Wistron. As a result, its share of total exports stands at a mere 25 per cent.

The fire, discovered on Sunday night, led to the temporary factory closure. Although no specific timeline has been given for resumption, Pegatron issued a statement on Monday saying there was a “spark incident” that will not have a significant financial or operational impact.

Sources say that even if all three suppliers had similar capacities, the fire’s impact would not exceed 0.36 per cent of India’s total iPhone production. If the Pegatron facility stays closed for seven days, it would affect only 0.6 per cent of the overall production.

Retailers affiliated with Apple Inc. note that the company maintains a four-week stockpile, so they foresee no issues.

This is not the first disruption at an iPhone assembly facility. Foxconn also temporarily shut its plants following worker protests due to a food poisoning incident.