Apple may halt supply to Wistron for code violations

Wistron Managing Director Sudipto Gupta added the firm is working closely with the State Government to ensure such incidents do not recur.
Apple company logo (Photo | AP)
Apple company logo (Photo | AP)

BENGALURU:  Taiwanese electronics contract manufacturer Wistron, which has expansion plans in India, may temporarily lose more supply from tech giant Apple over the violation of the company code of conduct after thousands of its employees resorted to violence at its manufacturing facility in Narasapura last week, according to top industry analysts.

Wistron Managing Director Sudipto Gupta, in a letter to the Karnataka Government, dated December 14, stated that the company is committed to its over $250 million electronic manufacturing plan in India, which is a key to its global plans, and looks to expand its presence in this very important market.

“We bring the best of practices worldwide to our plant and operations and want to protect workers’ interests. We will work together with the State Government to ensure that plant operations are resumed at the earliest,” Gupta said in his letter. He added that Wistron is deeply distressed by the recent incidents that took place at the Narasapura facility.

Centre pulls up state govt over Wistron violence

Wistron Managing Director Sudipto Gupta added the firm is working closely with the State Government to ensure such incidents do not recur. The company will support the police investigations. Even though Wistron slashed its loss estimates, experts say that the allegations of non-payment of dues/wages-reduction is a serious charges which may hurt Apple’s brand image, resulting in temporary loss of contract. Apple is currently investigating whether Wistron was in violation of guidelines and has sent its staff and auditors to the site. Wistron’s loss may, be rival iPhone maker Foxconn and Pegatron’s gain with a likelihood of the manufacturing base shifting to neighbouring Tamil Nadu.

“Foxconn has a plant at Sriperumbudur whereas Pegatron will start its operations in 2022 for which Karnataka is a key contender. Pegatron has committed to invest $1 billion for its iPhone manufacturing in India. At this juncture, the onus will lie with the Karnataka Government as well as Wistron to preserve their image and not hurt the investment/expansion opportunities,” sources privy to the matter said.

On Wednesday, the Department of Promotion of Industry and Internal Trade (DPIIT) pulled up the Karnataka Government yet again and asked it to expedite the inquiry into the Kolar plant violence and identify the culprits. Prior to this, senior officials from DPIIT, Niti Aayog and Karnataka Government participated in a virtual meeting to take stock of the ongoing investigations. Even as the research firm Counterpoint predicted that Wistron’s loss due to the violence and consequent shutdown of the facility will hit 8-10% of production and cause minimal damages to Apple’s revenues, analysts say that a bigger concern will be the dent in reputation for the tech major.

“Apple’s policies on labour are very strict and any observation of non-payment of dues to the workers may not be taken lightly. Although the Kolar facility is manufacturing the iPhone SE 2020 and older versions of the premium phone, the demand for iPhone 12 has peaked, so isn’t really a matter of financial loss, but their brand value,” Faisal Kawoosa, chief analyst and founder, TechArc, said. Last month, Apple’s second largest contract supplier Pegatron faced a probe by Apple in China after charges of employing students for night shifts and overwork, violating the tech giant’s policies.

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