Tata Group Plans to Pick up Majority Stake in Pegatron's iPhone Factory in Chennai

9 Apr 2024 , 10:10 AM

Pegatron, a contract manufacturer, is in advanced discussions to sell a controlling share in its iPhone manufacturing operation near Chennai to the Tata Group.

A company spokesperson stated that the agreement is anticipated to finalize within the next two to three months or, at the latest, by the second quarter of the fiscal year. However, it remains uncertain whether the arrangement will resemble a Wistron-style acquisition or involve a joint venture, with both options being considered.

Wistron, like Pegatron and Foxconn, is a Taiwanese contract manufacturer for Apple. Tata Group purchased its local business for $125 Million (₹1,000 Crore) in November last year, making it the first Indian company to produce iPhones.

When asked about the probable Tata takeover, Minister for Electronics, IT, and Railways Ashwini Vaishnaw said, “I am pleased to see that Indian champions are emerging in mobile phone manufacturing. As the industry expands, more and more young people are finding new job prospects.”

This is because Pegatron is a smaller company, with fewer than two years remaining under the production-linked incentive (PLI) system by the time the transaction is finalised.

According to one of the sources stated above, the Tata Group is anticipated to finalise the transaction through its subsidiary Tata Electronics.

According to experts, Apple may want to conclude the acquisition as quickly as possible to avoid ownership uncertainty ahead of its annual unveiling. The business plans to debut new iPhones in September, with production beginning in June-August.

Pegatron employs over 9,500 workers in India and produces around 4.5 million iPhones per year. In 2022, the business launched operations in the world’s second-biggest smartphone market.

It was one of the three Apple contract manufacturers chosen under the smartphone PLI programme. However, Pegatron would only be eligible for rewards for four years because it began production a year after Foxconn and Wistron. It has pledged to invest ₹1,132 Crore under the PLI programme between FY23 and FY25.

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