Third Apple contract manufacturer to launch operations in Chennai

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AirPods

China’s Luxshare Precision Industry Co will be the third major contract manufacturer of Apple Inc to set up shop in Tamil Nadu, after Foxconn and Pegatron. It will revive the now-defunct Motorola factory in Sriperumbudur, the emerging electronics hub just 50 km from Chennai, for its operations.

Luxshare’s entry into India will be a major boost for Apple as the former is into manufacturing wearables and hearables like Apple Watch and Apple Airpods for the Cupertino-based global electronics major. The Chinese firm is expected to launch production in the next three months, according to sources, as it has finally got clearance in January from the Union Government, which kept its application pending for about two years due to a slew of reasons.

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The development comes as Apple plans to move a significant portion of its production outside China following the Covid-19 pandemic experience. The approval for Luxshare will allow Apple to manufacture accessories for the domestic and international markets.

Luxshare, which acquired the Motorola factory that was lying dormant for several years in 2021, plans to invest Rs 745 crore in the plant, to provide jobs for 4,000 people, sources in the know told DH.

“Luxshare will manufacture electronic components and wearables in Sriperumbudur. The company has also applied for the Union Government’s Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS),” a source said on the condition of anonymity.

SPECS is aimed at strengthening the electronics manufacturing ecosystem in the country by providing a financial incentive of 25% on capital expenditure for the identified list of electronic goods that comprise downstream value chain of electronic products.

Another source, in the know, told DH that the Tamil Nadu government has also granted necessary approvals for Luxshare to launch manufacturing of components. Luxshare did not respond to an email seeking its response.

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At present, Taiwanese electronics majors Foxconn, Pegatron, and Wistron, which operates out of Malur near Bengaluru, assemble Apple iPhones, including the flagship high-end models. Other companies like Finland’s Salcomp and Flex India supply components to Apple, while home-grown Tata Electronics’ massive electronics ecosystem in Hosur is into making platforms for Apple iPhones.

The Union Government took about two years to clear Luxshare’s application, due to a long process that is followed to permit Chinese companies to operate in India, especially after a stand-off on the border between the two countries in 2020.

The development regarding Luxshare also comes at a time Foxconn and Pegatron are looking to expand production capacity at their facilities in Tamil Nadu. DH had on November 12 reported that the two Taiwanese contract manufacturers of Apple will invest more in the state as the demand from their client to assemble phones in India continues to increase.

The state, already home to top 16 electronics manufacturers, including Nokia, Samsung, Flex, Dell, Motorola, Salcomp, HP, and Foxconn, wants the electronics industry to be at par with its automobile industry, that accounts to 37.6% of the country's automobile and auto component exports, apparel (30.8 percent) and footwear (46.4 percent).

The state has two exclusive Special Economic Zones (SEZs) for electronics and hardware manufacturing in Sriperumbudur and in Oragadam, 70 km from Chennai, spread over 800 acres.