In a big business move, it is said that Tata Electronics has bought a majority stake in iPhone manufacturing by Taiwanese manufacturer Pegatron in India.
This establishes the Indian-based company at an all-time significant mark as the company continues to increase its share in iPhone manufacturing. A closer look at this strategic move and what it means for both Apple and India's manufacturing map is shown below.
Tata Expands Footprint in iPhone Manufacturing
According to Gadgets 360, Tata Electronics will own 60% of the joint venture, which will assume the day-to-day management of Pegatron's iPhone plant located in Chennai, India.
Pegatron, an important supplier for Apple, retains the remaining 40% and continues its technical support. The acquisition is a part of Tata's larger plan to strengthen its iPhone production capabilities in the country.
This occurs at a time when multinational companies, including Apple, have decided to relocate diversified manufacturing from China due to increasing geopolitical tensions and its accompanying uncertainty in trade.
Tata is now positioning itself as a leading player in the global supply chain for companies like Apple by acquiring control of Pegatron's plant, which happens to be one of India's biggest iPhone contract manufacturers.
Change in Pegatron Strategy
Pegatron's decision to gradually cease operations and sell its sole iPhone manufacturing facility in India is at the tail-end of several strategic realignments aimed at reducing dependence on Apple.
The Taiwanese company has had immense pressure, largely due to advocates of diversification, who have long recommended moving beyond China as part of the supply chain, which also relates to Pegatron's current push.
Apple has been manufacturing iPhones through Pegatron, Foxconn, and Wistron for quite some time.
But now, with the growing tension between the US and China, Apple is aggressively looking for alternative options where it can diversify its business to reduce its dependency on Chinese manufacturing.
The acquisition of Pegatron's plant will form an integral part of Apple's long-term strategy for increasing the supply chain in India.
India is Expected to Be a Big Apple Market
One of the critical steps for Tata in its expansionist march through the iPhone manufacturing business is buying the Pegatron plant. It already has an iPhone assembly unit in Karnataka, which it bought from Wistron back in 2022.
Besides this, the Tata group is also building another iPhone unit in Hosur in the southern state of Tamil Nadu. Pegatron, now owned by Tata, makes its total number of iPhone production plants in India three, thus becoming a tough competitor to the Foxconn company.
Pegatron employs 10,000 workers at its Chennai facility and produces 5 million iPhones a year. This will be the third large hub for iPhone production in India, as Tata increases its stake in the global supply chain of iPhones.
As per Reuters, analysts say India is likely to account for 20-25% of iPhone shipments in 2024, up significantly from 12-14% last year. This will also coincide with the interest of Apple in having more products outside China.
Effects on India's Tech Industry and Workforce
The takeover of Pegatron by Tata will make Tata strong in the supply chain worldwide and will bring dynamism to the overall tech manufacturing system in India.
iPhone production lines are to expand in India and more jobs are expected to be born, mainly in the southern states where Tata operates its plants. Inevitably, with demand for skilled labor in manufacturing continuing to grow fast in the tech sector, the deal might just become the golden opportunity needed to make India thrive as a global manufacturing hub.
In a nutshell, the Tata Electronics deal to take a majority stake in Pegatron's iPhone plant is an important development for Apple's global supply chain. The more India features in the making of tech stuff, Tata is even better positioned to assume a much more significant role in Apple operations at the same time contributing to a broader expansion of the Indian tech industry.
