Apple halts iPhone production at Indian factory after riot breaks out over pay

Last Saturday, workers at a Wistron factory in India starting rioting during the night shift. Almost all 2,000 employees were protesting their pay which supposedly was lower than the amount they were promised by Wistron. The latter is one of the few contract assemblers hired by Apple to build the iPhone at factories in locations like China and India. According to AppleInsider, employees damaged furniture, vehicles and assembly units. Damage to the latter might lead to a delay in the production of some iPhone models at the facility.

The Times of India sent out a tweet with video showing rioters trying to break into Wistron executives' offices. The damage, originally estimated at $57 million, was reduced to a range between $3.5 million and $7 million. The company continues to estimate the extent of the damage as it works to return the factory to full production. One source says that the incident significantly disrupts  Wistron's iPhone business.

One member of the staff said that Wistron promised an engineering graduate Rs 21,000 ($285) per month, but instead had paid him only Rs 16,000 ($217) at first. That figure was eventually reduced even more to Rs 12,000 ($163) over the last three months. Other employees received even less money with one non-engineering graduate getting paid Rs 8,000 ($108) on a monthly basis, and some complaining that they received only Rs 500 a month ($6.78).

As we mentioned at the beginning of this article, the riot involved personnel working on the night shift. The violence grew in intensity as the night progressed. Wistron originally had a goal for the plant, located in Narasapura, to hire 2,000 workers with a final goal of hiring 10,000-20,000 factory employees. Meanwhile, Apple stopped production at the factory on the night of the riot and is working with Wistron and local law enforcement. Apple wants to know whether its manufacturing partner violated its rules on pay.

In an email written to Reuters, Apple said, "We have teams on the ground," and have "immediately launched a detailed investigation at Wistron's Narasapura facility." Both Apple and Wistron's plans to expand manufacturing in India could be damaged by the riot. Wistron, along with other iPhone manufacturers like Foxconn and Pegatron, is based in Taiwan. Over the next year, Wistron was planning on assembling another iPhone model in India but it could take weeks or months for the assembler to heal.

Earlier this year, Wistron said that it would invest 13 billion rupees ($176.74 million) over 5 years to qualify for the Indian government's incentive plan. If the firm's Indian operations remain suspended, the company could lose much of this year's incentives. In addition, analysts in India say that Apple could decide to use other contract manufacturers in India such as Pegatron which is supposed to begin operations in India soon.

Other analysts predict that the riot might not ruin India's chances of becoming a major international center for tech production. Abheek Barua, the chief economist at India's leading private lender HDFC Bank, said "The episode could dent India’s potential as a source base for larger corporations, but the overall attractiveness of this market will stand the test. I also believe it will induce companies like Apple to take a closer look at their vendors and their policies, instead of driving them to an exodus." Meanwhile, Wistron received support from New Delhi and the government of Karnataka state. The latter is where the factory where the riot took place is located.

India, while the second largest smartphone market in the world, is a developing country. This means that lower priced handsets and those with perceived value (like Xiaomi's phones) sell the best.