Pegatron Investing $1 Billion to Set up iPhone Chip Assembly Factory in Indonesia

The ongoing trade war between China and the United States has forced many of Apple’s suppliers to look at other regions for setting up their manufacturing plants. This morning, Pegatron signed a letter of intent and announced that it will be investing up to $1 billion to build a factory that would make “chips for Apple smartphones.”

Pegatron plans on assembling the chips in partnership with Indonesian electronics company PT Sat Nusapersada. The factory will be located on the island of Batam. Initially, Deputy Minister Waristo Ignatius told that the factory would be used to produce chips, though later he clarified that the raw materials would be imported and the chips would be assembled in the factory.

The factory can also be used by Pegatron down the line to produce MacBook components for Apple.

Pegatron is one of Apple’s key supply chain partner and assembles a number of devices for the company. It is still a smaller player when compared to Foxconn which assembles and manufactures a number of Apple products and their key components.

Our Take

Pegatron was Apple’s first manufacturing partner to have set up an iPhone assembly factory in India. Now, Foxconn is also joining the bandwagon and is looking to set up an iPhone factory in the country to produce newer high-end iPhones.

With the trade war between China and the United States getting worse, more and more companies are likely to look elsewhere to set up their manufacturing facilities in a bid to minimize the impact of this battle on their production and bottom line.

[Via Reuters]