Pegatron to Invest up to $1 Billion in Indonesian iPhone Chip Factory

[MacRumors]

Apple supplier Pegatron plans to invest up to $1 billion in an Indonesian factory to produce chips for Apple smartphones, an Indonesian ministry official said on Tuesday (via Reuters).

The Taiwan manufacturer made the pledge in a signed letter to the Indonesian government, in which it said the chips would be produced in partnership with Indonesian electronics company PT Sat Nusapersada, according to Deputy Minister Warsito Ignatius.

Pegatron expects the investment to come somewhere between $695 million and $1 billion, although the variables influencing the exact amount have not been disclosed.

In December 2018, Apple was said to be looking to shift production of older iPhones to Pegatron in an effort to avoid losing billions in revenue as a result of its patent dispute with Qualcomm. That dispute has since been resolved, however rising trade tensions between the U.S. and China has put manufacturers in both countries on alert. Pegatron has assembly plants in China, which suggests its pledge of Indonesian investment could be a contingency plan.

According to today's report, the new Indonesian factory might also be used to produce MacBook components, although that operation "would not be in the short term," Ignatius told Reuters.

A DigiTimes rumor in May 2018 tipped Pegatron to pick up orders from Apple to produce a MacBook powered by an ARM processor, although the information it was based on may have been misconstrued with the Touch Bar on Apple's MacBook Pro, which is already powered by an ARM-based T1 chip as a companion processor. Apple said in 2017 that it had no plans for Macs powered solely by ARM chips, rather than Intel processors.

Article Link: Pegatron to Invest up to $1 Billion in Indonesian iPhone Chip Factory

 

[ksec]

Apple supplier Pegatron plans to invest up to $1 billion in an Indonesian factory to produce chips for Apple smartphones, an Indonesian ministry official said on Tuesday

Pegatron wouldn't need a billion if they were only doing assembly, which is what they do in their current business. So I assume they are actually making chips, as in Fabs.

But why ? And why Indonesian ?

They are partnering with a local company Sat Nusapersada, which is another assembler as well just like Pegatron and Foxconn.

This story doesn't make much sense to me.
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Edit: And so I decide to dig a little deeper.

The president of Pegatron ( In US's terms he would be CEO ) actually state in Feb / March they are not investing $1B in Indonesian. ( Make sense if you look at Pegatron's revenue and Cash Flow, $1B is not small amount of money )
They intent ( i.e Not confirmed ) to invest UP TO $300M. With its initial investment at $40M. And they are moving some assembly line outside of China to hedge against the trade war. They are also looking at many other options such as Vietnam and Thailand.

The $1B number is said to be oriented from an Indonesia government official in late 2018.

And none of the previous news and rumours or statements made anything about producing chips. Which is entirely a different business and require different level of technical knowledge and expertise.

I guess Reuter just want a story out for whatever reason.

 

[HMFIC03]

I wonder what the feasibility of shifting some manufacturing in Mexico is in the future? Could lessen the impact multiple economic/migrant issues if possible..

 

[PickUrPoison]

Pegatron wouldn't need a billion if they were only doing assembly, which is what they do in their current business. So I assume they are actually making chips, as in Fabs.

But why ? And why Indonesian ?

They are partnering with a local company Sat Nusapersada, which is another assembler as well just like Pegatron and Foxconn.

This story doesn't make much sense to me.
----------------------------------------------------------------------------------------------------------

Edit: And so I decide to dig a little deeper.

The president of Pegatron ( In US's terms he would be CEO ) actually state in Feb / March they are not investing $1B in Indonesian. ( Make sense if you look at Pegatron's revenue and Cash Flow, $1B is not small amount of money )
They intent ( i.e Not confirmed ) to invest UP TO $300M. With its initial investment at $40M. And they are moving some assembly line outside of China to hedge against the trade war. They are also looking at many other options such as Vietnam and Thailand.

The $1B number is said to be oriented from an Indonesia government official in late 2018.

And none of the previous news and rumours or statements made anything about producing chips. Which is entirely a different business and require different level of technical knowledge and expertise.

I guess Reuter just want a story out for whatever reason.

Yeah no way this is a chip fab. PT Sat Nusapersada is mainly a PCB manufacturer/assembler. Maybe some kind of translation error. They would be buying equipment to manufacture PCBs and populate chips (and other components), but not produce/manufacture the chips themselves.

Edit: the Reuter’s article has been updated within the last half-hour, they now clarify the factory will be assembling chips, not producing them.

 

[69Mustang]

The $1B number is said to be oriented from an Indonesia government official in late 2018.

Wait, wait, wait. Hold up. Are you telling me a government official exaggerated the potential economic impact of a future business deal? I'm shocked, utterly shocked. I'm also udderly shocked but that's due to an unrelated dairy allergy.

Seriously, for government officials the world over lying about the economic impact of projects is just like breathing... it comes naturally. If a gov't official quotes a number, an optimist should think the number will actually be half the quote. A pessimist should think the number will be half of what the optimist thinks. A realist knows it will really be half of what the pessimst thinks.

Good job on that follow up research, btw

 

[ksec]

Yeah no way this is a chip fab. PT Sat Nusapersada is mainly a PCB manufacturer/assembler. Maybe some kind of translation error. They would be buying equipment to manufacture PCBs and populate chips (and other components), but not produce/manufacture the chips themselves.

Edit: the Reuter’s article has been updated within the last half-hour, they now clarify the factory will be assembling chips, not producing them.

Yes they have updated the story, but even assembling chips still does not make sense. And you don't need a $1B investment to assemble those.

Good job on that follow up research, btw

Thanks. I wish I didn't need to. There are very little "thoughts" in today's Journalism, people are just reposting what everyone said without going through to ask, Why? How? Where? Does any of these make any sense?

But then most reader don't ask these question either, they just believe and trust what they read as "truth". And we all know how the world is now due to these information being spread around like wild fire.

Although I don't blame them, making a living / business out of journalism has become next to impossible.
[doublepost=1559059274][/doublepost]

I wonder what the feasibility of shifting some manufacturing in Mexico is in the future? Could lessen the impact multiple economic/migrant issues if possible..

Depends on what kind of manufacturing you are talking about. There are lots of consideration such as political stability, incentives, working salaries, electricity supply, clean water supply, other infrastructure such as transportation to move finished goods around. To be honest I know very little about Mexico, but my view and guess is that there are probably much better alternative in the South East Asia Region.

 

[justperry]

Pegatron wouldn't need a billion if they were only doing assembly, which is what they do in their current business. So I assume they are actually making chips, as in Fabs.

But why ? And why Indonesian ?

They are partnering with a local company Sat Nusapersada, which is another assembler as well just like Pegatron and Foxconn.

This story doesn't make much sense to me.
----------------------------------------------------------------------------------------------------------

Edit: And so I decide to dig a little deeper.

The president of Pegatron ( In US's terms he would be CEO ) actually state in Feb / March they are not investing $1B in Indonesian. ( Make sense if you look at Pegatron's revenue and Cash Flow, $1B is not small amount of money )
They intent ( i.e Not confirmed ) to invest UP TO $300M. With its initial investment at $40M. And they are moving some assembly line outside of China to hedge against the trade war. They are also looking at many other options such as Vietnam and Thailand.

The $1B number is said to be oriented from an Indonesia government official in late 2018.

And none of the previous news and rumours or statements made anything about producing chips. Which is entirely a different business and require different level of technical knowledge and expertise.

I guess Reuter just want a story out for whatever reason.

I shouldn't be patronising a country which I love and lived in for just under a decade but I don't think Indonesia is up for it.
Indonesia is by no means a manufacturing hub/country, it's mostly agricultural products they export, and a bit of oil, gold and other products/resources from the ground/soil.
Educational system is not good at all, there are a few cities which are doing ok but not that many, Jakarta is the place where it might be a place for manufacturing, the rest is ways of.

But as I said before, I love the country, easy going friendly people, beautiful nature (How long though) and still cheap to live without the hassle of the west.

 

[JetTester]

China is a dangerous place to do business. The government can change the rules, or shut you out, at a whim, and that's without a trade war in the mix. It is wise to have a Plan B.