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Tata expected to acquire Pegatron’s only iPhone plant in India

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In Short:

Pegatron is in talks with Tata Group to give control of its iPhone plant in India. Tata plans to hold a 65% stake in the joint venture, with Pegatron providing technical support. This move is part of Apple’s diversification strategy beyond China. Tata is a key player in Apple’s growth in India. Pegatron’s reasons for scaling back its Apple business in India are unclear. The deal is expected to close in six months.

Pegatron in Advanced Talks with Tata Group for iPhone Manufacturing Facility in India

Pegatron is reportedly in advanced discussions to transfer control of its sole iPhone manufacturing plant in India to the Tata Group, according to sources familiar with the matter. This move signifies Pegatron’s continued restructuring of its Apple partnership.

Joint Venture Deal

As per the arrangement, Tata is expected to hold a minimum of 65% stake in a joint venture that will manage the Pegatron facility near Chennai in Tamil Nadu. The Taiwanese company will offer technical support and retain the remaining stake in the venture, as stated by one of the sources.

Tata, a prominent conglomerate in India, will oversee the joint venture through its Tata Electronics unit, the second source confirmed.

Current Operations and Future Plans

The Pegatron factory in India, which employs around 10,000 workers and produces 5 million iPhones annually, represents the firm’s last remaining facility after ceding control of an iPhone plant in China last year. Tata already operates an iPhone assembly plant in Karnataka and is constructing another in Hosur, Tamil Nadu, with Pegatron likely becoming its partner.

Additionally, Pegatron is in the process of building another iPhone factory at its Chennai site, with discussions involving Tata to take over this facility as well, according to sources.

Financial Details and Closing Timeline

Details of the financial aspects of the deal have not been disclosed. The negotiations between Tata and Pegatron are projected to conclude within six months, with all Pegatron India employees expected to transition to the joint venture entity.

Apple’s Supply Chain and Expansion in India

Apple, aiming to diversify its supply chain beyond China amid geopolitical tensions, views the Chennai Pegatron plant as integral to its iPhone manufacturing strategy in India. Analysts estimate India contributing 20-25% of total iPhone shipments in the current year, up from 12-14% in the prior year.

The reasons behind Pegatron’s gradual withdrawal from its Apple business, including in India, remain undisclosed. Last year, Pegatron cited capital optimization as the motive for the China plant deal.

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