Tata Group to Acquire Pegatron's iPhone Plant in Chennai, Apple Backs Deal | Geopolitical Shift
Pegatron is in talks with Tata to sell its only iPhone manufacturing facility in India. Tata plans to hold a minimum of 65% stake in the joint venture, with Pegatron providing technical support. The deal has received Apple's backing and aims to diversify Apple's supply chain beyond China.
In a significant development, Pegatron, the Taiwanese electronics manufacturing company, is reportedly in advanced talks with the Tata Group to sell its only iPhone manufacturing facility in India. According to sources with direct knowledge of the matter, the deal has received the backing of Apple, with Tata planning to hold a minimum of 65% stake in a joint venture that will operate the Pegatron plant near Chennai city in the southern Indian state of Tamil Nadu. Pegatron will provide technical support and retain the remaining stake.
Tata, one of India's largest conglomerates, will oversee the joint venture through its Tata Electronics unit. The Pegatron India factory, which employs around 10,000 workers and produces 5 million iPhones annually, is the last remaining facility operated by Pegatron after it relinquished control of an iPhone plant in China to Luxshare in a $290 million deal last year. Both Tata and Pegatron have not responded to requests for comments, while Apple declined to provide any statement. Financial details of the ongoing negotiations have not been disclosed by the sources.
This move comes as Apple aims to diversify its supply chain beyond China amidst the geopolitical tensions between Beijing and Washington. For Tata, acquiring the Pegatron plant in Chennai will strengthen its iPhone manufacturing plans. Tata already operates an iPhone assembly plant in the neighboring state of Karnataka, which it took over from Wistron last year, and is also constructing another facility in Hosur, Tamil Nadu, where Pegatron is expected to become its joint venture partner.
In addition to the existing Pegatron factory, the talks between Tata and Pegatron also include the possibility of taking over another iPhone factory being built at Pegatron's Chennai campus, according to the sources.
The negotiations between Tata and Pegatron are expected to conclude within six months, and all Pegatron India employees will transition to the joint venture entity, as per the first source.
Currently, Apple's iPhone contract manufacturers in India include Tata, Pegatron, and Foxconn. Tata plays a crucial role in Apple's expansion plans in India, with analysts estimating that the country will contribute 20-25% of total iPhone shipments this year, up from 12-14% last year.
The reasons behind Pegatron's gradual withdrawal from its Apple business, including in India, remain unknown. Last year, Pegatron stated that the China plant deal was aimed at raising capital to optimise its business.
Pegatron is in talks with Tata to sell its only iPhone manufacturing facility in India.
Tata plans to hold a minimum of 65% stake in the joint venture, with Pegatron providing technical support.
The deal has received Apple's backing and aims to diversify Apple's supply chain beyond China.
Source: REUTERS