NEW DELHI: Tata group will buy into the India operations of Apple’s manufacturing partner Pegatron – almost a year after acquiring the business of another supplier Wistron – making it one of the biggest contract supplier to the American electronics giant along with Taiwanese giant Foxconn.
Tata group, which has been making swift inroads into the coveted and highly-sophisticated manufacturing ecosystem of Apple and has even started making the latest generation of iPhones 16, will be buying around 60% in the operations of Pegatron.
The deal comes in as the N Chandrasekaran-led diversified conglomerate makes giant strides in the electronics manufacturing eco-system, including making investments for making semiconductors in the country.
Questions sent to a spokesperson for Tata Sons were not answered. Apple spokesperson in India also did not respond to questions.
Sources said that talks between Pegatron and Tata Electronics Pvt Ltd, a group company of the Tata group, had been going on for the past one year as the Taiwanese supplier wanted to induct an Indian partner in view of the low margins of the manufacturing business and challenges in handling the worker’s base.
“Being a contract manufacturer to Apple is not an easy business, and the margins are also very tight. Companies have to ensure top-level manufacturing quality considering the sophisticated nature of Apple’s products, and there cannot be any disruptions in production as the supplies are to global markets,” a top official — who is part of Apple’s manufacturing ecosystem — told TOI.
“Another issue which has caused severe concerns amongst Apple’s Taiwanese suppliers is the issue of labour management. It is a challenge to handle labour in southern India and companies are mostly on the edge in view of the recurring demands made by labour and the unions,” the official said, requesting anonymity.
Wistron, which was one of the first of Apple’s suppliers to begin manufacturing in India, had faced violence at its factory in late 2020 which saw workers break glass panes and doors and attack the offices of senior officials.
Pegatron is believed to have contributed around 10% to iPhone’s India production last year, and has a factory in Tamil Nadu. Tata and Pegatron will also likely partner for an upcoming factory at Hosur in Tamil Nadu.
Pegatron’s India factory is believed to be employing around 10,000 workers and has a capacity to produce five million iPhones every year.
Through Wistron, Tata group had acquired an iPhone manufacturing plant in Karnataka.
It is believed that the Tata group and Foxconn will now aggressively expand investments with Apple increasingly developing India as a strong manufacturing base for iPhones outside China. It is estimated that India manufacturing will contribute nearly 24% to iPhone global production this year, double to what was contributed last year.
The govt is pushing Apple to make more products in India, including the MacBook and iPads. The company is yet not ready to manufacture them here.
However, Apple will start making the AirPods in India from next year with the casing for the product being manufactured at the Pune factory of American contract manufacturer Jabil, and the AirPods at a unit of Foxconn in Telangana.
