Tata Electronics to buy 60% stake in Apple supplier Pegatron's iPhone plant in Tamil Nadu, says report

Tata Electronics is set to acquire a 60 per cent majority stake in Taiwanese contract manufacturer Pegatron's iPhone plant in Tamil Nadu, forming a new joint venture (JV), Reuters reported citing two sources.

The move will strengthen Tata's position as an Apple supplier in its India supply chain, the sources added.

What We Know So Far

Tata Electronics will hold 60 per cent of the JV and run its daily operations, while Pegatron will hold the remaining 40 per cent and provide technical support, they added.

Details of the deal are not yet public, the report noted adding that the sources did not elaborate on the financial aspects.

According to the first source, the deal being sealed was made known at the iPhone plant internally on November 15 (Friday). And the second source added that Tata and Pegatron will approach the Competition Commission of India (CCI) “in the coming days” to file for approval.

Tata declined to comment, while Apple and Pegatron did not respond to questions sent on November 17, the report added.

Background of Developments

Reuters in April reported that Pegatron is in advanced talks to sell its only India-based iPhone manufacturing facility near Chennai to the Tata Group.

The deal has received the backing of Apple, sources told the agency then.

Pegatron’s India factory has around 10,000 employees and manufactures 5 million iPhones annually.

Meanwhile, Tata already operates an iPhone assembly plant in 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.

The move will help Tata bolster its plans to start iPhone manufacturing and help Apple expand its operations in India. Apple’s iPhone manufacturers in India include Tata, Pegatron and Foxconn.

Analysts estimate India will contribute 20-25% of total iPhone shipments this year, from 12-14% last year.

(With inputs from Reuters)