India’s Tata Group is reportedly in discussions with Taiwanese electronics manufacturer Pegatron to establish a joint venture, with the intention of co-managing the Apple iPhone assembly plant currently under construction in the southern state of Tamil Nadu. The partnership is anticipated to hasten the growth of iPhone production capacity in India.

According to Reuters citing industry sources, Tata, having acquired an iPhone assembly plant in the southern state of Karnataka from the Taiwanese company Wistron in 2023, has officially become part of the iPhone supply chain in India.

On the other hand, the new facility in the city of Hosur, Tamil Nadu, will be Tata’s second iPhone assembly plant in India, featuring 20 production lines, as disclosed by sources cited by Reuters.

Amid rumors that Tata Group in India is deeply engaged in discussions with Pegatron to form a strategic alliance and establish a joint venture, Pegatron did not to respond to market speculations.

Currently, approximately 10% of Apple’s iPhone production capacity in India comes from Pegatron, with the vast majority of capacity originating from Foxconn’s iPhone assembly plant located in Karnataka.

Furthermore, Foxconn has the highest share in Apple’s current new iPhone assembly. Among the four iPhone 15 series models, only certain models like iPhone15 and iPhone15 plus are produced by Tata Group in India.

An industry source has reportedly stated, “Tata cannot build everything from scratch,” He indicated that after Tata establishes a joint venture with Taiwanese firm Pegatron, Pegatron will provide technical and engineering support.

In recent years, Pegatron has been consistently expanding its global footprint, with expansions ongoing in Taiwan, Mexico, Indonesia, India, Vietnam, and other locations.

Regarding its operations in India, Pegatron announced in late October 2023 that it had invested approximately NTD 300 million (roughly USD 9.56 million) to secure leasing rights for factory premises in Tamil Nadu.

In January of this year, the Indian subsidiary announced signing a construction general contracting project to commence electromechanical engineering construction for a new plant, totaling approximately NTD 510 million (roughly USD 16.26 million). According to industry sources, Pegatron’s Indian facilities primarily focus on smartphone production at present.

(Photo credit: Apple)

Apple’s iPhone is gaining even more popularity in India, with Tata Group, India’s conglomerate, reportedly preparing to build a new iPhone assembly plant. According to Bloomberg, this move aligns with Apple’s broader manufacturing strategy expansion in India.

Previously reported by TrendForce, Apple’s decision to opt for India is primarily due to the fact that since 2015, India has become the fastest-growing regional market for smartphones globally. Earlier in October this year, Tata Group officially acquired Wistron’s subsidiary in Bengaluru, primarily responsible for assembling orders for the iPhone 14. 

According to sources from Bloomberg, Tata Group is not only recruiting new staff for this facility but also planning to build the largest iPhone assembly plant in the town of Hosur, Tamil Nadu, India.

The new facility is expected to establish 20 assembly lines, planning to employ approximately 50,000 workers within the next 2 years. It is slated to be operational within 12 to 18 months. However, the existing government-supported PLI (Production-Linked Incentive) fiscal incentives will expire around the time of operation. Therefore, Apple and Tata Group may seek new subsidies from the government for the production of the new iPhones.

Apple has been actively expanding in India, and the new iPhone assembly plant is a crucial strategy for both companies. For Apple, it serves to diversify the supply chain risk by gradually shifting the assembly of iPhones from China to India. Meanwhile, Tata Group aims to expand its traditional business scope.

Read more

• Tata Group to Become the Fourth iPhone Assembler as Production Relocation Accelerates
• [Insights] Tata’s Challenge in Securing Large iPhobe Orders After Officially Acquiring Wistron’s India Factory

(Photo credit: Apple)

According to Bloomberg’s report, Taiwanese company Wistron, previously one of Apple’s iPhone assembly suppliers in India, has agreed to sell its 100% stake in Wistron InfoComm Manufacturing (India) Private Ltd. to Tata Group for $125 million on October 27, 2023. Wistron will formally exit Apple’s supply chain, and Tata will become the first local iPhone assembly supplier in India.

TrendForce’s insights:

1. Apple Focuses on Indian Manufacturing as Wistron Exits iPhone Assembly Business

Amid international geopolitical risks, Apple has chosen to diversify its supply chain and production risks by shifting its iPhone assembly business from China to India. Apple’s decision to opt for India is primarily due to the fact that since 2015, India has become the fastest-growing regional market for smartphones globally.

Additionally, in recent years, the Indian government has actively worked to make India an attractive manufacturing and export hub for international companies. With strong government policy support and a vast domestic market, these factors have allured Apple to shift its production base here.

In the past, Wistron, along with Foxconn and Pegatron, was one of the three iPhone manufacturers for Apple in India. However, in 2020, there were reports of a riot at Wistron’s Indian factory, where thousands of Indian employees were dissatisfied with excessive working hours and unpaid wages. They vandalized the factory and even stole iPhones. This incident prompted Apple to initiate an investigation and ultimately led to a temporary suspension of its orders with Wistron.

Additionally, on July 17, 2020, Wistron announced the sale of its iPhone assembly plant located in Kunshan, China, to Luxshare Group. While this factory had an annual revenue that could exceed 100 billion yuan, its net profit margin was only 0.2%.

It can be inferred that the profit margins in the subcontracting business were inherently low, and following the riot incident at its Indian plant, Wistron may have lacked the bargaining leverage with Apple. Therefore, after considering all factors, it decided to sell its iPhone assembly plant in India.

2. Tata Group Takes Over India Manufacturing, But Expectations Are Low for a Significant Increase in Their Share of New iPhone Assembly

Currently, Wistron’s factory in Bengaluru is primarily responsible for assembling orders for the iPhone 14. To qualify for production subsidies from the Indian government, Wistron has committed to producing at least $1.8 billion (USD) worth of iPhones by March 2024.  After this transaction is completed, Tata Group will take over and fulfill this commitment.

Previously, Tata Group’s casing factory produced only one out of every two components that met Apple’s standards, indicating significant room for improvement in its yield rate. By examining the outsourcing production share table below, it is evident that Foxconn has the highest share in Apple’s current new iPhone assembly. Among these four models, only certain models like iPhone15 and iPhone15 plus are produced by Tata Group in India.

This suggests that Apple may be allocating the production of relatively less popular models to Tata Group for testing their yield rates. This decision may be due to the positioning of iPhone and Plus series products, coupled with their comparatively lower sales performance in recent generations. Apple is likely doing this until the production standards of the Indian outsourcing factory can be confirmed to meet 100% compliance.

Consequently, even though Tata Group’s acquisition of Wistron’s subcontracting factory is expected to expand its capacity, its share in new iPhone assembly is unlikely to significantly increase in the short term.

Read more

• Tata Group to Become the Fourth iPhone Assembler as Production Relocation Accelerates

Due to geopolitical and pandemic, Apple has been accelerating the diversification of its supply sources, with India being the most well-known case for such transfer. According to TrendForce, India’s Tata Group is expected to become the fourth iPhone assembler for Apple. Following Apple’s pattern, new suppliers receive smaller orders for lower-end models, which means Tata Group will initially get only small orders for the iPhone 15 and iPhone 15 Plus.

TrendForce thinks the small order has 3 implications in Apple’s relocation plan:

First, Tata, the largest conglomerate in India, has received orders for iPhone 15 and iPhone 15 Plus, indicating that India will become the first wave of shipments for new iPhone series.

Second, the reason why Tata is able to produce iPhone is due to the acquisition of Wistron’s Indian production line. Therefore, Tata’s entry also means Wistron’s exit from the iPhone assembly business.

Last, Tata is the fourth company to undertake iPhone assembly business after Luxshare joined in 2020 for iPhone 12 Pro Max assembly.

TrendForce emphasized that although Tata’s share of assembly orders for various iPhone models is only 5% in 2023, it still shows an accelerating trend of Apple’s production relocation.