Tata Group will soon take over a major plant owned by Taiwan’s Wistron Corp to give India its first homegrown iPhone maker. The company was reportedly in talks with Wistron for months, and the deal is expected to close by the end of March 2023.
The Economic Times quoted two unnamed persons familiar with the ongoing talks saying that Tata and Wistron have been discussing various possible tie-ups. As the plans are still out of public sight, the names of the persons were not revealed in the report. Tata is expected to oversee the manufacturing operations with support from the Taiwanese company. Earlier, in December, it was reported that Tata had initiated talks with Wistron.
As of now, Wistron and Foxconn Technology Group are the leaders in iPhone assembly. If the deal between Tata and Wistron goes through as expected, it will pose a major challenge to China’s dominance in the global electronics market. Notably, because of China and US tensions and Covid-related hurdles, China is already facing challenges in maintaining its stature in the market.
ET added that Tata is aiming to complete the process by March 31 so that Tata’s electronics arm can formally take over Wistron’s position in Government’s program that gives incentives to set up such plants in India. The next cycle of the incentives by GoI is set to start from April 1 for the 2023-24 Financial Year.
The iPhone manufacturing operations of Wistron in India would cost around $600 million, provided the company fulfills the set requirements to receive the incentives from the Government in the current financial year.
Reportedly, in 2020, Wistron agreed to sell its iPhone production business in China to a competitor. iPhone manufacturing is a thin-margin business, and the company wanted to diversify its business to other segments, including servers. While Wistron is all set to exit the iPhone manufacturing in India as well, other Taiwanese companies in this sector, including Foxconn and Pegatron Group, are expanding their manufacturing businesses.
Tata’s deal with Wistron is important because Apple is moving ahead to reduce its dependency on China for iPhone production, especially after the Covid-19 pandemic that has severely affected the supply chains. Furthermore, the restrictions imposed in China during Covid have created havoc for many companies that have manufacturing plants in the country, including Apple.
The manufacturing plant Tata has its eyes on is located 50 KMs east of Bengaluru. It is a 2.2 million-square-foot factory with 10,000 workers and a couple of thousand engineers providing services. Notably, even after the deal, Wistron would continue providing iPhone services in India.
In recent times, Tata has taken several steps to increase business with Apple. It owns a factory in Hosur located close to Bengaluru, where iPhone components are manufactured. Tata has also initiated the hiring process to increase the number of employees in that factory. Hosur plant also has additional land where Tata might plan to expand the existing iPhone manufacturing lines. In the first quarter of 2023, 100 Apple Stores will be opened in association with Tata, and the first store is set to open in Mumbai. Notably, while iPhone sells online in India, the Brick and Mortar stores have not yet opened in the country.