The deal, if concluded, will be Tata Electronics’ second acquisition after Wistron InfoComm Manufacturing (India).A Tata Group source confirmed the development, adding that the nitty-gritty on the ownership structure are being hammered out. Pegatron couldn’t be contacted for immediate comments.
Tata Electronics will own a majority stake of more than 50% in Pegatron India, while the remaining will be owned by original promoter Pegatron – Taiwan’s second-largest contract electronics manufacturer.
Pegatron India has its factory near Chennai in Tamil Nadu, where it rolls out five million iPhones annually and employs about 10,000 people. Financial details of the proposed transaction were not shared.
For Tata Electronics – a greenfield venture set up by the Tata Group during the pandemic in 2020 – the Pegatron purchase will boost its iPhone manufacturing capabilities. Tata Electronics already runs Wistron InfoComm’s iPhone assembly plant in Karnataka, which it had acquired from SMS InfoComm (Singapore) and Wistron Hong Kong. The company, led by Randhir Thakur, is also adding more production lines at its greenfield facility in Hosur, Tamil Nadu. Currently, this facility makes enclosures for iPhones.
Pegatron India plans to open a second factory in the country, which will also come under the management control of Tata Electronics as part of the deal. It intends to add the second facility close to its existing plant near Chennai, for which it had invested $150 million. The company accounts for 10% of Apple’s iPhone production in India.
Apple wants to increase the proportion of iPhones made in India as it moves some production away from China following Covid disruptions and geopolitical tensions. It has been making iPhones in India since 2017 and the iPhone SE was the first model assembled in the country.
Apart from Pegatron and Tata Electronics, Foxconn is also a contract manufacturer for Apple’s iPhones in India. Tata is key to Apple’s growing ambitions in the country, which Reuters, quoting analysts, said will contribute 20-25% of total iPhone shipments this year, from 12-14% last year.
The development at Pegatron India indicates that the Taiwanese company is scaling back its play in Asia’s largest economy. Last year, Pegatron forfeited control of its China iPhone factory to rival Luxshare in a $290-million deal.