Tata Electronics to Acquire Major Stake in iPhone Maker

Tata Electronics, the Indian arm of the Tata Group conglomerate, is reportedly in advanced talks to acquire a controlling stake in Pegatron, a major supplier of iPhones for Apple. This deal, if finalized, would mark a significant expansion for Tata Electronics within the Indian smartphone manufacturing industry and position it as a strategic player within Apple’s global supply chain.

Discussions Progressing Towards Acquisition

Sources familiar with the discussions reveal that negotiations between Tata Electronics and Pegatron are at an advanced stage, with Tata aiming to secure a majority stake exceeding 50% in Pegatron’s Indian operations. This potential acquisition comes on the heels of Tata Electronics’ successful purchase of the iPhone manufacturing unit from another Taiwanese contractor, Wistron, in November 2023.

Boosting Production Capacity and Expertise

Pegatron’s Indian factory, situated near Chennai in Tamil Nadu, currently manufactures around 5 million iPhones annually, with a focus on older models. Acquiring this unit would provide Tata Electronics with a significant boost in production capacity along with valuable expertise in iPhone assembly. This would be particularly beneficial as Apple looks to diversify its manufacturing base beyond China due to ongoing trade tensions and geopolitical concerns.

Deal Closure Timeline and Strategic Alignment

While the finer points of the investment are still under negotiation, sources suggest the deal could be finalized by July-August 2024, following the conclusion of India’s general elections. This potential acquisition aligns perfectly with the Indian government’s push for self-sufficiency in electronics manufacturing under the ‘Make in India’ initiative, which aims to establish India as a global manufacturing hub. The Indian government’s production-linked incentive (PLI) schemes have played a crucial role in incentivizing companies like Tata Electronics to set up manufacturing bases in India, making the country a more attractive destination for electronics production.

Tata’s Growing Influence in iPhone Manufacturing

Tata Electronics’ strategic move to acquire stakes in prominent iPhone manufacturers underscores India’s growing importance within Apple’s global supply chain. Apple has been increasingly looking to diversify its production base beyond China, and India, with its large and skilled workforce, presents a compelling alternative. This potential acquisition would be a landmark achievement for Tata Electronics, solidifying its position as a dominant player in the Indian electronics manufacturing sector and potentially giving it a stronger foothold in the global smartphone supply chain. The deal could also have a ripple effect, inspiring other Indian companies to invest in electronics manufacturing and further propel India’s ambitions of becoming a self-reliant electronics powerhouse.

Potential Impact on Apple’s Supply Chain

For Apple, this deal could lead to a more geographically balanced supply chain, mitigating risks associated with overdependence on China. Additionally, India’s large domestic market presents a significant growth opportunity for Apple, and a local manufacturing presence could help Apple better cater to the Indian consumer base.

Looking Ahead

The potential acquisition of a majority stake in Pegatron by Tata Electronics is a significant development that could reshape the Indian smartphone industry and strengthen Apple’s global supply chain. With the deal nearing its final stages, it will be interesting to see how it unfolds and the long-term implications for both companies and the wider electronics manufacturing landscape.

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