Tata Group To Buy Pegatron's iPhone Plant In India; Check Details Here

Recent reports suggest that Pegatron, a key player in Apple's manufacturing ecosystem, is in advanced discussions to transfer control of its sole iPhone production facility in India to the esteemed Tata Group. This potential move not only signifies a significant shift in Pegatron's partnership with Apple but also sheds light on Apple's evolving global supply chain strategy.

The Proposed Deal: A Closer Look

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According to Reuters reports, Tata Group is planning to acquire a 65% stake, in a joint venture that will oversee the operations of Pegatron's facility near Chennai. This arrangement, which has received Apple's endorsement, positions Tata Electronics, a unit of the renowned Tata Group, as the operator of this joint venture. While Pegatron will continue to offer technical support, Tata Group will wield majority control over the operations.

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The Pegatron factory in India has about 10,000 workers and makes 5 million iPhones every year. This factory is the only one Pegatron has left for making iPhones after it sold another one in China to Luxshare for $290 million last year.

Both Tata and Pegatron didn't say anything when asked for comment, and Apple also chose not to comment. The people who gave the information didn't tell how much money is being talked about in the ongoing discussions.

Implications for Apple's Supply Chain Diversification

This potential acquisition is in line with Apple's broader strategy to diversify its manufacturing footprint beyond China, especially in the wake of escalating geopolitical tensions between the US and China. By bolstering its presence in India, Apple aims to mitigate risks associated with overreliance on any single manufacturing hub. For Tata Group, assuming control of Pegatron's facility presents a lucrative opportunity to fortify its iPhone manufacturing capabilities in the Indian market.

Expanding Manufacturing Footprint in India

Tata Group's foray into iPhone manufacturing isn't entirely new. Last year, the conglomerate acquired an iPhone assembly plant in Karnataka from Wistron. Moreover, Tata is actively constructing another facility in Hosur, Tamil Nadu, which could potentially become a joint venture site with Pegatron. Talks also involve the possibility of Tata taking over another iPhone plant under construction by Pegatron in Chennai.

Potential Impact on India's iPhone Market

iphone manufacturing | Photo: CNBC

With Tata Group poised to play a pivotal role in Apple's Indian ambitions, industry analysts foresee significant growth in iPhone shipments within the Indian market. It's estimated that India's contribution to total iPhone shipments could surge to 20-25% this year, compared to 12-14% in the previous year. This underscores the strategic significance of Tata's involvement in Apple's supply chain diversification efforts.

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The Mystery Behind Pegatron's Retreat

While the rationale behind Pegatron's gradual disengagement from its Apple-centric operations, including the Indian facility, remains somewhat opaque, last year's divestment of its Chinese plant was attributed to the need for capital infusion for "business optimization."

Tata Group's potential acquisition of Pegatron's iPhone manufacturing plant in India underscores Apple's strategic shift towards diversifying its global supply chain. As negotiations unfold and deals materialize, the landscape of iPhone manufacturing in India is poised for significant transformation, with Tata Group emerging as a key player in Apple's ambitious growth plans.