The Dongguan-headquartered company, which assembles iPhones and also makes Apple Watches and ‘hearables’ like the AirPods, will be the third after Taiwan’s Foxconn and Pegatron, to set up manufacturing facilities in Chennai for the American technology major.
In May 2020, Luxshare had inked a deal with the Tamil Nadu government to take over the shuttered Motorola phone manufacturing unit and invest around Rs 750 crore. While it’s been well over two years since the proposal was made, state officials estimate they will be able to conclude the deal very soon.
“The land registration has happened and some clearances around security — in view of it being a Chinese company — have to be obtained. The governments (Centre and state) are working on it,” an official in the know said.
On its part, the Tamil Nadu government is courting Luxshare aggressively as it looks to deepen the footprint of electronics manufacturing in the state. Last week, officials from state’s investment promotion body met Luxshare executives in Taiwan to take stock of the situation, sources said.
For Apple, having all of its main contract manufacturers — Foxconn, Wistron, Pegatron and now Luxshare — operational in India, is viewed as part of a larger game plan to broaden its supply chains beyond China.
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“For Apple, it’s about speed and scale,” a government official closely aware of Apple’s India deliberations told ET.
Meanwhile, the central government officials pointed out that the Chinese company will have to clear a process and get all relevant security clearances before being allowed to operate in India, while refuting all claims that the process has been stalled.
“Frankly, a large part of the supply chain of Apple has China origins. So, if we keep saying “no” to all of them, how will we ever manufacture here? There is no prohibition. But (the company) has to undergo certain scrutiny,” a senior government official told ET.
Emails sent to Luxshare and Apple on the status of the Chennai plant remained unanswered until press time.
Advantage Tamil Nadu
Terming a successful conclusion to the Luxshare proposal as “another feather in their (TN) cap”, the central government officials said that given the geopolitical situation, Chinese companies or even those with some amount of Chinese ownership have to “jump through many hoops to get clearances” and hence it tends to be a long-drawn process.
If the deal fructifies, Chennai will be home to three Apple contract units. While Foxconn and Pegatron make top-end iPhones from their plants near the city, Luxshare will help revive a unit that once rolled out the iconic Motorola-branded phones and has since been shuttered for nearly a decade.
Analysts are of the view that Apple regards the Indian market as the only other rival to China in terms of scale, cost of labour and size of market.
“It (Apple) has been wanting Luxshare to set up shop for years now because that would mean that with Foxconn, Wistron and Pegatron — all of its main contract manufacturers would be in India and three of them would be near Chennai. That’s extremely beneficial for them,” said an analyst.
Luxshare reported over $21 billion in operating revenue in 2021, according to its annual report, ranking 34th in a list of top 100 electronics manufacturers in China. The company has an Indian subsidiary Luxshare India Pvt Ltd.
Salcomp, an originally Finnish company bought by Shenzhen, China-based manufacturer Lingyi iTech, has been rapidly expanding off Chennai’s electronics corridor near Sriperumbudur, not far from where the city is set to get its second airport. Salcomp runs its large unit within the Nokia Telecom SEZ, where Luxshare had bought a building, apart from the Motorola factory.
In recent times, Apple has stepped on the gas in finding alternatives to China. Foxconn, for example, has begun rolling out the newly released iPhone14 just a month after global launch in September by the Cupertino, California-based gadgets major. Pegatron, another Taiwanese smartphone assembler, has kicked off assembly of top-end smartphones from its plant in Mahindra World City, off Chennai.
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