According to a report by Caixun, at a time when the Indian market and manufacturing prospects are optimistic, Wistron, which was deployed in India in 2016, has reversed operations and is rumored to withdraw from the Indian market. According to industry analysts, there are two key factors behind this.
Text/Yang Yufei
One month ago, Apple CEO Cook went to Mumbai, India, to open the platform for the first Apple directly-operated store. Within two days, the directly-operated store in New Delhi also welcomed the arrival of Apple fans. Just as iPhone sales in the Indian market are growing rapidly, and Cook is emphasizing strengthening manufacturing in India, why does Wistron, an iPhone foundry, decide to withdraw from India?
The general trend of making iPhones in India
“Financial News” reported that with the vigorous development of India’s economy and Prime Minister Narendra Modi’s launch of the Indian Manufacturing Incentive Program (PLI), international major manufacturers such as Samsung, Flextronics, and China’s Xiaomi, TCL Group’s China Star Optoelectronics, Wingtech Technology All of them have moved forward to set up factories, and Taiwan’s Hon Hai and Pegatron are also eager to expand the scale of manufacturing in India. Wistron, which entered the Indian market as early as 2016, has three production bases in Bangalore, the capital of Karnataka, South India.
For Apple, iPhone manufacturing in India is the general trend, not only to diversify the risk of manufacturing in China, but more importantly, to target India’s huge domestic demand market with a population of more than 1.4 billion. According to data from the market research agency CMR, India has 600 million smartphone users, second only to China, ranking second in the world; at present, Android users are still the main users, and China’s Xiaomi, realme, red rice, OPPO and other mobile phones account for about 64%, Samsung about 20%; and iPhone shipments last year not only increased by 11%, the market share also reached a new high of 5.5%.
Caixun analyzed that starting from 2017, the affordable iPhone SE opened a new chapter in Indian production. Last year’s latest iPhone 14 was also manufactured in India two months after its launch, not only meeting the needs of the local market, but also exporting to neighboring countries. According to research firm Counterpoint, the shipments of iPhones made in India grew 65% last year compared to the previous year, and will double this year.
Optimistic about the market prospects, Hon Hai recently announced an additional 1.1 billion yuan to purchase land in the north of Bangalore, covering an area of up to 300 acres, which is equivalent to the size of more than 25 football fields. India’s Pegatron also started mass production last year at its factory in Singapore’s industrial zone near Bangalore.
The undisclosed secret of selling the factory to Tata Group
“Financial News” reported that after Wistron’s layout in China has been separated from Apple’s iPhone supply chain, the outside world originally thought that orders might shift to India. The Tata Group, even the transaction amount and the time of delivery, are conclusive.
Even if Wistron does not comment or respond to the rumors, it is already an open secret in the local Taiwanese business circle. According to local Taiwanese businessmen, Wistron sold all three factories to Tata Group, and only retained a small repair center to continue serving customers. The sale amount may reach 20 billion yuan.
According to the analysis of Caixun, there are two factors behind Wistron’s decision to withdraw from manufacturing in India. First, low-end product OEM is unprofitable. The iPhone orders assembled by Wistron are mainly low-end models. From the sales of new iPhone 14 models last year, it can be found that fruit fans have a soft spot for high-end products, but low-end models are not selling well. The rise of Lianxun is not only Wistron, but even Pegatron is under pressure.
Second, Wistron’s transformation is focused on new businesses, and resources are readjusted. Since the restructuring in 2017, Wistron has carried out the operation mode of three major business entities – Wistron Technology, Wistron Intelligence and new businesses. It can be seen from the latest briefing of Wistron’s legal meeting that smartphones are no longer included in the product and operation strategy; Wistron Chairman Lin Xianming also said: “This year’s investment will be more precise, because there is no wasted capital. “
According to the “Financial News” report, Wistron’s revenue last year reached 985 billion yuan, approaching the trillion yuan mark, setting a record high. Lin Xianming emphasized that revenue is not the main goal, the most important thing is to have a high-quality and resilient operating system. Last year, the operation organization was adjusted, and the dual CEO system was changed back to the single CEO and general manager system, and Lin Jianxun took the post.
Judging from Wistron’s domestic and overseas layout in the past three years, it can also be found that factories in Taiwan, Mexico, Vietnam, and Malaysia have plans to continue to increase capital and expand new factories. In terms of new business layout, Wistron will further expand its LCD module business after acquiring Kaohsiung Jingjieda, a subsidiary of Japan Display Corporation (JDI) in 2021, and step into the field of vehicle and industrial control, and at the same time cut into Japan’s first-tier ( Tier 1) Depot customers.
In addition, “Financial News” also found that Wistron established Wistron Biotech Holdings in 2016, invested in the field of medical biotechnology, and successively invested in more than 10 medical start-up companies at home and abroad, combined with Wistron’s own software and hardware Advantages of manufacturing Wistron Medical was established to deeply cultivate the medical equipment OEM market. The goal is to become the top 3 medical material manufacturers in Taiwan in the next five years. At the same time, Wistron’s important reinvestment also includes AI server foundry Wiwynn Technology, and network communication equipment factory Qiqi, etc., which have become the main engines to promote operational growth.
Subsidiaries are competitive and the future prospects are promising
From the perspective of stock price performance, Wistron’s stock price has soared by more than 80% this year, rising from 29.45 yuan all the way. As of May 19, it closed at the highest price of 53.2 yuan, rewriting the new high price in the past 12 years; the market value also rose from 854 yuan at the beginning of the year. 100 million yuan, climbing all the way to 154.3 billion yuan.
According to the “Financial News” report, Hou Qiaobi, an analyst at Uni-President Investment Consulting, pointed out three key factors that are optimistic about Wistron: First, in terms of price-to-earnings ratio, Wistron is underestimated compared with its peers. The share dividend is 2.6 yuan, a record high in 12 years, attracting ETF funds to actively buy; second, the subsidiary Wiwynn has increased its holdings. Recently, the subject of AI servers has become popular, and the demand prospect is good, and the parent company has followed suit; third, it has withdrawn from low-end iPhones Assembly OEM orders are conducive to the improvement of product structure and positive development of profits.
continue reading the report
In addition, driven by the surge in market capitalization, the index compilation company MSCI (Mingsheng) announced the semi-annual adjustment results on May 12. Wistron jumped from the global small index constituents to the global standard index constituents. The adjustment results were released on May 31. The daily close took effect, attracting foreign investors to buy back. Although the financial report of Wistron in the first quarter of this year is not satisfactory, the net profit after tax in the single quarter is only 174 million yuan, and the net profit per share is 0.06 yuan. However, as the transformation project continues, the legal person expects to see the benefits of the product structure change in the near future. .
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Tags: Hon Hai bought land built factory Wistron sold factories Apple quit India Lin Xianming plans long time
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