Business

Wistron partners with India's Optiemus in boost for electronics manufacturing

3 minute read

A worker checks a PCB (Printed Circuit Board) of a mobile handset at a manufacturing plant in Noida, India, October 12, 2018. REUTERS/Anushree Fadnavis/Files

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NEW DELHI, Aug 24 (Reuters) - Wistron Corp (3231.TW) of Taiwan is partnering with India's Optiemus Electronics (OPTI.NS) to build products such as smartphones and laptops, a boost to Prime Minister Narendra Modi's push to make the country an electronics manufacturing hub.

As part of the deal with contract manufacturer Wistron, Optiemus will invest roughly $200 million to ramp up electronics manufacturing in the next three to five years, the two companies said.

The partnership is expected to yield revenues of 380 billion rupees ($5.13 billion) over five years for Optiemus, the company said, adding that it plans to hire roughly 11,000 workers for its two plants on the outskirts of New Delhi. It has a workforce of just about 300 now.

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"Wistron wants to grow its footprint in India, Optiemus wants to leverage the government initiatives (in electronics manufacturing)... so it makes sense to come together from a win-win point of view," Optiemus managing director A Gururaj, who once led Wistron in India, told Reuters.

The success of India's electronics manufacturing sector is key to Modi's ambition of turning the country into the factory of the world, like neighbouring China.

To boost exports, Modi has announced production linked-incentive (PLI) programmes that pay manufacturers for sales of locally made goods.

Although foreign companies need to make phones and laptops above a certain value to get PLI benefits, there is no such threshold for Indian companies.

That means Wistron and Optiemus, which have won PLI approvals for smartphones and IT products, can make cheaper products and still get the government incentives.

"Optiemus is very advanced discussions with a large global company to make smartphones," said Gururaj, declining to name the client.

EXPANSION PUSH

The Wistron-Optiemus partnership is also key to Wistron's business ambitions in India, which have so far rested largely on Apple, its key client in the South Asian nation.

Wistron entered India in 2015 by buying a minority equity stake in Optiemus in a partnership that assembled devices for brands including Taiwan's HTC (2498.TW) and South Korea's LG (066570.KS). Wistron has since sold its equity back to Optiemus.

On Tuesday, Gururaj told a news conference that the two companies were open to conversations about financing for Optiemus or an equity stake sale in the Indian firm. He did not share specifics.

In 2017, Wistron began assembling iPhones in a small plant in the southern tech hub of Bengaluru and has since expanded to a much bigger factory in Karnataka state's Narasapura industrial area.

Worker discontent over unpaid wages led to a riot at the Narasapura factory late last year, leading Apple to put Wistron on probation.

"Wistron's partnership with Optiemus will help it scale and diversify manufacturing in India to other products beyond smartphones phones and key client Apple as well as assemble devices locally for other global clients," said Neil Shah of Hong Kong-based tech analytics firm Counterpoint Research.

Apart from being a key Apple supplier, Wistron also makes laptops for Dell , Xiaomi (1810.HK), Acer (2353.TW) and Intel-based servers.

($1 = 74.1100 Indian rupees)

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Reporting by Sankalp Phartiyal. Editing by Gerry Doyle

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