Pegatron is reportedly in advanced discussions to transfer control of its sole iPhone manufacturing facility in India to the Tata Group, news agency Reuters reported citing two sources. This development signifies Pegatron’s latest move to scale back its partnership with Apple.
As part of the proposed deal, which has Apple’s approval, Tata intends to hold a minimum 65 per cent stake in a joint venture responsible for operating the Pegatron plant near Chennai in Tamil Nadu. Pegatron would provide technical assistance and retain the remaining stake, one of the sources disclosed. Tata, a major Indian conglomerate, plans to manage the joint venture through its Tata Electronics unit, the second source added.
The Pegatron facility in India currently employs around 10,000 workers and manufactures approximately 5 million iPhones annually. This site is Pegatron’s last iPhone manufacturing facility following its relinquishment of control over an iPhone plant in China to Luxshare, a rival firm, in a $290 million transaction last year.
Both Tata and Pegatron declined to comment on the matter, while Apple refrained from providing a statement. Financial terms of the negotiations were not disclosed by the sources.
Apple’s efforts to diversify its supply chain beyond China, amidst increasing geopolitical tensions between Beijing and Washington, align with Tata’s iPhone manufacturing strategies in India. Tata already operates an iPhone assembly plant in Karnataka, acquired from Wistron last year, and is constructing another facility in Hosur, Tamil Nadu, where Pegatron is anticipated to become its joint venture partner.
In addition to its existing operations, Pegatron has been constructing another iPhone factory at its Chennai campus. Discussions between Tata and Pegatron for the factory are anticipated to conclude within six months, with all Pegatron India employees expected to transition to the joint venture entity, according to the first source.
Presently, Apple’s iPhone contract manufacturers in India include Tata, Pegatron, and Foxconn. Tata’s role is pivotal in Apple’s expansion plans in India, which analysts project will account for 20-25 per cent of total iPhone shipments this year, up from 12-14 per cent last year.
The rationale behind Pegatron’s gradual retreat from its Apple-related ventures, including in India, remains undisclosed. Pegatron stated last year that the China plant deal was executed to raise capital and optimize its business operations.
