iPhone factory violence: All you need to know about Apple contract manufacturer Wistron Corporation

The sudden violence at Apple's contract manufacturing partner Wistron's Karnataka facility on December 12 brought forth a lot of questions about this company and how it works.

Contract manufacturer Wistron Corporation is globally known for its communication devices and computer, smartphone production facilities. It is just in the last two to three years that Wistron has been entering markets like India to expand its smartphone manufacturing capacities.

But what does the company do and what is its history? Moneycontrol attempts to break it down for you:

What is Wistron?

Founded on May 30, 2001, Wistron is a Taiwan-headquartered technology service provider supplying ICT (information and communication technology) products and services to companies worldwide. The company is headed by Simon Lin who is its founding chairman and chief strategy officer.

It is an original design manufacturer which means that it enters into partnerships with large brands and manufactures products on their behalf in its facilities. However, the total number of brand partnerships haven't been disclosed publicly by Wistron.

Its products and services include PCs, servers, communication devices, professional display products and enterprise storage solutions. As per its 2019 annual report, the company has 80,000 employees in various R&D, manufacturing and after-sales service facilities in Asia, Europe and North America.

In India, the company is present through its subsidiary Wistron InfoComm Manufacturing India which is 100 percent owned by the parent.

In total, Wistron has close to 78 affiliated companies that operate across the world in the markers like the United States, Taiwan, China and India.

What does the company do?

Wistron enters into partnerships with large technology and device makers to manufacture products for them at its production facilities.

In July 2011, Wistron and Microsoft entered into an agreement that offered coverage under Microsoft's exclusive rights portfolio for Wistron products including tablets, mobile phones and other devices running the Chrome OS or Android platform.

Similarly, in September 2011, Wistron signed a patent licensing agreement with Intellectual Ventures, a US-based PE firm that focuses on licensing and development of intellectual properties. This US private equity firm is known to be selective of its partnerships and hence Wistron's agreement with it was a big announcement.

Again, in March 2016, Microsoft and Wistron Corp. announced a renewed Android patent licensing agreement covering Wistron’s tablets, mobile phones, e-readers, and other consumer devices running Android and Chrome platforms under Microsoft’s patent portfolio. This deal extended and expanded a prior Android intellectual property (IP) license between the companies.

Currently, Wistron’s business covers the following areas:

--Desktop, motherboard and professional computer
--Server, workstation and allied components
--Notebook, tablet, smartphone and handheld devices
--Satellite TV receivers and set-top boxes
--Video conferencing system and telecommunication equipment
--LCD TV and monitor
--Design and merchandising of computer software and programmes

How does its revenue stand?

As per the Wistron 2019 Annual Report, computer, communications and consumer electronics which the company refers to as 3C constituted 87.8 percent of its total sales in 2019.

Note: NT$ refers to New Taiwan Dollar. 1NT$=Rs 2.6

A majority of its sales comes from the United States, followed by Hong Kong/China and then Europe. Wistron’s India subsidiary was set up on February 18, 2018. The company’s annual report said that the paid-in capital for India manufacturing via the subsidiary was Rs 379.9 crore.

The India plans

While Wistron set up its India venture for manufacturing mobile phones in 2018, there has been a steady increase in the investment plans. Apple tied-up with Wistron in 2017 f0r manufacturing its iPhones.

Wistron already has manufacturing facilities in Taiwan and China.

The India plant was set up at Narasapura, which is about 70 kms from Bengaluru and has now a total investment of Rs 2,900 crore. This includes an initial investment of Rs 1,600 crore and an additional figure of Rs 1,200 crore. A report said that the additional investment was on the back of rising business demand for phone manufacturing.

The company is reportedly also planning to get other clients apart from Apple on board in its 43-acre facility in Karnataka. Of this, only 40 percent of the land has been utilised for manufacturing activities so far.

It initially started the India facility with a staff strength of 2,000 people but quickly added new employees on contract and crossed 10,000 people. Wistron's contract employers come under the purview of third-party agencies that are engaged by the Taiwanese firm to manage their employment contracts and compensation.

Violence at Wistron India

On December 12, workers engaged in a sudden protest damaging furniture and office property at Wistron’s Narasapura facility. The workers alleged there was a delay in payment and overtime payments denied due to which they were forced to protest.

The Karnataka labour department did an internal investigation where payment delays were proved. There was also a software glitch due to which Wistron’s third-party contractors could not make payments on time. The company in a statement to Taiwan stock exchange said that it is deeply concerned by the violence and that it is investigating the matter.

Sources said disciplinary action has also been taking including removal of Wistron Vice President who was overseeing India operations. The company did not make any official comment on the person removed but reports said that the executive removed was Vincent Lee.

What happens to Wistron in India?

Apple is said to have put Wistron on probation and has also started a detailed investigation on this matter. Apple wants to find out whether there were any labour law violations in India.

This means that Wistron may not be given any new contract manufacturing business by Apple and that any additional contracts will be post the completion of Apple’s investigation. The Wistron factory with 10,500 workers in Karnataka now waits for a clean-chit from Apple and its global parent before manufacturing can resume.

The exact quantum of losses and theft (if any) of electronic devices is also being assessed. For now, it is a wait-and-watch approach for Wistron India and its Taiwanese parent as it faces its first-such violation probe.