Tata Group, one of India’s largest conglomerates, is in advanced talks with Taiwan’s Pegatron, one of Apple’s contract manufacturers, to form a partnership for the iPhone assembly plant that Tata is building in the southern state of Tamil Nadu, according to two sources with direct knowledge of the matter.
Background
Tata is building the iPhone assembly plant in Hosur city, which will be its second such facility in the country. The first one is in Karnataka, which Tata took over from Taiwan’s Wistron last year. The move comes as Apple and its contract manufacturers are rapidly expanding their India operations, as the US tech giant diversifies beyond China following COVID-19 disruptions and geopolitical tensions.
Details
Tata is in talks to form a joint venture with Pegatron for the Hosur plant – its first such initiative – that would help speed up its plans to start manufacturing, said the two sources, who declined to be named as the talks are private and the deal has not been closed. The Taiwanese firm would provide technical and engineering support at the plant, the sources said. Pegatron did not immediately respond to a request for comment. Tata and Apple also did not immediately respond.
The new plant with Pegatron is expected to have 20 lines for iPhone assembly, one of the sources said, adding that Tata would hold a majority stake in the joint venture. “Tata cannot build everything from scratch,” said the second source, explaining the rationale behind the tie-up.
Implications
Tata’s success is crucial to Apple’s ambitions in India, one of the world’s fastest-growing smartphone markets. The US firm has been increasing its local production and sourcing to meet the government’s requirements for tax benefits and incentives. The proportion of iPhones made in India is expected to reach 20-25% this year, from 12-14% in 2023, according to Apple analyst Ming-Chi Kuo.
Pegatron currently operates an iPhone assembly plant in Tamil Nadu and is in talks to add a second facility. It accounts for about 10% of Apple’s iPhone output in India, with Taiwan’s Foxconn accounting for most of the rest.