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Tata Electronics Acquires 60% Stake in Pegatron’s Tamil Nadu Plant
An industry executive familiar with the situation informed ET that Apple’s contract manufacturers can currently produce approximately 40 million iPhones per month, with a monthly output ranging from 30 to 35 million units. This recent agreement signifies a forthcoming boost in capacity as Apple aims to diversify its supply chain beyond China amidst escalating geopolitical concerns.
Sources familiar with the matter have revealed that Tata Electronics is in the process of finalizing an agreement to acquire a controlling interest in the Tamil Nadu plant of Taiwanese contract manufacturer Pegatron. This strategic decision highlights Tata Electronics’ commitment to expanding its iPhone assembly capabilities.
Industry insiders have indicated that Tata Electronics will acquire a 60% majority share in the joint venture overseeing iPhone production, while Pegatron will hold the remaining stake.
Combining the capabilities of Wistron and Pegatron facilities, coupled with Tata’s ongoing expansion at its Hosur plant, there is a possibility that the company’s production capacity could reach or even come close to matching that of Foxconn in Taiwan, the current leader in iPhone manufacturing in India, as suggested by the public.
According to an industry executive familiar with the situation, Apple’s contract manufacturers are presently capable of producing roughly 40 million iPhones per month, with a monthly output ranging between 30-35 million units. Despite attempts to contact Tata Electronics and Pegatron, they did not respond.
Tata Group Strengthens iPhone Production Footprint as Pegatron Shifts Strategy
There has been a notable surge in demand over the past few months, exceeding Apple’s projections, according to the company. In a bid to solidify its position as a preferred component manufacturer, the Tata Group has implemented a comprehensive strategy involving multiple partners, as per sources familiar with the situation. Negotiations are ongoing with various stakeholders, resulting in a swift agreement with Pegatron.
In India, Pegatron has a workforce of approximately 9,500 individuals and manufactures roughly 4.5 million iPhones annually. Commencing its activities in 2022, the company entered the globe’s second-largest smartphone territory. Pegatron was chosen as one of the three Apple subcontractors eligible for the smartphone production-linked incentive (PLI) initiative.
Pegatron will receive benefits for a shorter period compared to Foxconn and Wistron under the PLI schemes, as it commenced manufacturing a year later. Its investment commitment under the PLI scheme stands at ₹1,132 crore for the period between FY23 and FY25.
Tata Group, known for its diverse portfolio ranging from salt to steel, made history by becoming the inaugural Indian entity to join the worldwide iPhone supply chain. This milestone was achieved through the acquisition of an iPhone assembly plant in Taiwan, which was previously owned by Wistron. As a result, Tata Group successfully entered the global iPhone supply chain, marking a significant step in its expansion.
Executives in the industry have indicated that Pegatron’s decision to divest is a strategic move as they gradually move away from the Apple supply chain. This shift is occurring in China, which is a key manufacturing hub for iPhones and various other Apple devices. JP Morgan, a brokerage firm, highlighted that Apple’s manufacturing sector is witnessing a trend of consolidation with a reduced number of key players involved.
