Apple Supplier Pegatron Said to Be in Talks With Tata to Sell Its Only India iPhone Plant

Under the deal, Tata plans to hold at least a 65 percent stake in a joint venture that will operate the Pegatron plant.

By Reuters | Updated: 8 April 2024 18:47 IST

Apple Supplier Pegatron Said to Be in Talks With Tata to Sell Its Only India iPhone Plant

Photo Credit: Reuters

The Pegatron India factory has around 10,000 employees and makes 5 million iPhones annually

Highlights

Pegatron forfeited control of an iPhone plant last year to Luxshare
Apple is increasingly looking to diversify its supply chain beyond China
Tata, Pegatron and Foxconn manufacture iPhones in India

Pegatron is in advanced talks to hand over control of its only iPhone manufacturing facility in India to the Tata Group, said two sources with direct knowledge, marking the Taiwanese firm's latest scale back of its Apple partnership.

Under the deal, which has received the backing of Apple, Tata plans to hold at least a 65 percent stake in a joint venture that will operate the Pegatron plant near Chennai city in the southern Indian state of Tamil Nadu, with the Taiwanese firm providing technical support and holding the rest, one of the sources said.

Tata, one the largest conglomerates in India, will operate the joint venture through its Tata Electronics unit, the second source said.

Apple Supplier Pegatron Halts iPhone Assembly for Second Day After Fire

The Pegatron India factory has around 10,000 employees and makes 5 million iPhones annually. It is the last such facility operated by the firm after it forfeited control of an iPhone plant in China last year to rival Luxshare in a $290 million (roughly Rs. 2,415 crore) deal.

Tata and Pegatron did not respond to emailed requests for comments. Apple declined to comment. The sources did not share financial details of the ongoing negotiations.

Apple is increasingly looking to diversify its supply chain beyond China amid geopolitical tensions between Beijing and Washington. For India's Tata, the Chennai Pegatron plant will bolster its iPhone manufacturing plans.

Pegatron Said to Be in Talks to Open Second Factory in Tamil Nadu

Tata already operates an iPhone assembly plant in the neighbouring southern state of Karnataka, which it took over from Taiwan's Wistron last year, and is also building another in Hosur in Tamil Nadu, where Pegatron is likely to emerge as its joint venture partner.

Pegatron has for months also been building another iPhone factory at its Chennai campus, and the Tata deal talks include taking over that facility as well, the first source said.

The talks between Tata and Pegatron for the factory are expected to close in six months and will see all of the Pegatron India employees move to the joint venture entity, the first source added.

Apple's iPhone contract manufacturers in India currently include Tata, Pegatron and Foxconn. Tata is key to Apple's growing ambitions in India, which analysts estimate will contribute 20-25 percent of total iPhone shipments this year, from 12-14 percent last year.

The reasons for Pegatron's gradual withdrawal from its Apple business, including in India, were not known. Last year, Pegatron said the China plant deal was done to raise capital to "optimise its business".

Apple launched the iPad Pro (2022) and the iPad (2022) alongside the new Apple TV this week. We discuss the company's latest products, along with our review of the iPhone 14 Pro on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

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