Apple supplier Pegatron temporarily halted iPhone assembly at its facility in south India on Monday after a fire incident on Sunday night, three sources told Reuters. The Taiwanese firm canceled the first two shifts of the day at the factory near Chennai in Tamil Nadu state and is yet to inform assembly workers whether it will operate the third shift of the day, they added. No casualties have been reported.
A fire at the plant, built by local firm Casagrand and opened in February this year, was caused by an electrical short circuit, according to a source familiar with the matter. The facility, which is not part of the company’s main iPhone production operation in China, produces back panel parts for Apple’s latest phones.
As India is a significant smartphone exporter, the incident could impact Apple’s supply chain. India exported $9 billion worth of smartphones between April and February this year, with iPhones making up more than half of that total. Apple and its key suppliers have been shifting a portion of their manufacturing to India in recent years as they seek to diversify away from China’s economy and avoid potential impacts from rising Sino-U.S. trade frictions.
Pegatron assembles about 20% to 30% of all iPhones globally, Nikkei Asian News reported last month. The company has plants in Shanghai and Kunshan under strict Covid-19 lockdowns. However, the company has kept its operations in India since 2021 because of a special exemption from the Indian government that allows manufacturers to work with fewer workers in enclosed facilities to minimize the risk of infection.
The incident will further amplify the growing tensions between Apple and some key suppliers. In late 2022, the iPhone maker suspended deliveries of some models because of a dispute over wages with Foxconn, one of its largest assembly suppliers. The dispute, after allegations of poor working conditions and worker harassment at the Chinese firm, has prompted Apple to seek out new partners to make its iPhones.
While some analysts said the move would have little effect on the company’s current sales and profit outlook, others warned that it was a sign that Apple might struggle to meet its production targets shortly as it tries to diversify its production base beyond China. The company’s shares closed up more than 1 percent on Monday. Apple has several new products on the way, including the budget iPhone it announced last week.
