Report: Tata Set to Acquire Pegatron's iPhone Plant in India

Pegatron, a Taiwanese contract manufacturer, is reportedly in advanced talks with Tata and Sons, India's largest conglomerate, to sell its sole iPhone manufacturing plant in the country. This move comes as Apple seeks to diversify its supply chain beyond China amidst geopolitical tensions between the United States and China, as well as the contentious relationship between China and India following a border skirmish in 2020.

If the deal goes through, it will mark the second instance of a Taiwanese contract manufacturing giant handing over the reins of its iPhone manufacturing plant to the Tata Group, following Wistron's exit from India last year after transferring its plant to Tata. The transaction is expected to take place with Apple's blessing, with Tata planning to own a 65% stake in the joint venture that will operate the Pegatron plant near Chennai, the capital of the southern state of Tamil Nadu.

Pegatron will provide technical support as part of the collaboration, indicating that it will not be a complete exit like Wistron's. The deal will be executed through the Tata Electronics unit, with the facility near Chennai currently employing around 10,000 people and producing 5 million iPhones annually. This will be Pegatron's last such facility globally, having previously forfeited control of its iPhone plant in China to Luxshare in a deal valued at $290 million.

The increased scrutiny on Chinese firms in India, such as Vivo, Xiaomi, and BYD, has led to Vivo and Oppo exploring options to hand over manufacturing of their products to local contract manufacturers. Similarly, MG Motors in the automobile industry has partnered with the Jindal Group, while BYD has scaled back its manufacturing plans for India.

The Wistron facility is also located in the southern state of Karnataka, and Tata is currently building a new state-of-the-art facility in Hosur, Tamil Nadu. The addition of the Pegatron plant aligns well with Tata's contract manufacturing ambitions. It is reported that Pegatron could remain a partner for the new facility in Hosur.

The news of the potential acquisition comes as Pegatron is constructing another plant near its Chennai factory, which will also be part of the Tata deal. The completion of the deal is expected to take up to six months.

Currently, Apple's iPhones are manufactured by Foxconn, Pegatron, and Tata in India. Tata plays a crucial role in Apple's plans, with its contribution to iPhone shipments expected to increase from 12-14% last year to 25% in the future.

The growing output of iPhone manufacturing in India allowed Apple to launch the iPhone 15 models simultaneously in India and the United States last year, marking a significant milestone for the Cupertino-based tech giant's presence in the Indian market.