Pegatron is in advanced talks to hand over control of its sole iPhone manufacturing plant in India to Tata Group, two people familiar with the matter said, marking the latest step in the Taiwanese company scaling back its partnership with Apple.

Under the deal, which is backed by Apple, Tata plans to hold at least 65% of a joint venture that will operate the Pegatron factory near Chennai in the southern Indian state of Tamil Nadu and be owned by the Taiwanese company. The company provides technical support. supports and holds the remaining shares, a source said.

Tata, one of India’s largest conglomerates, will run the joint venture through its Tata Electronics unit, a second source said.

Pegatron’s India factory has about 10,000 employees and produces 5 million iPhones annually. This is the last such factory operated by the company after it gave up control of an iPhone factory in China last year to compete with Luxshare Precision Industry for $290 million (about Rs 2,415 crore).

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

Apple has increasingly sought to diversify its supply chain outside of China amid geopolitical tensions between Beijing and Washington. For India’s Tata, the Pegatron plant in Chennai will support its iPhone manufacturing plans.

Tata already operates an iPhone assembly plant in the neighboring southern state of Karnataka, which it took over from Taiwan’s Wistron last year, and is building another plant in Hosur, Tamil Nadu, and Shuo may become its joint venture partner.

Pegatron has also been building another iPhone factory at its Chennai campus for months, and the Tata deal talks also included taking over the plant, the first source said.

The first source added that talks between Tata and Pegatron over the factory are expected to be concluded within six months and all Pegatron India employees will be transferred to the joint venture entity.

Currently, Apple’s iPhone contract manufacturers in India include Tata, Pegatron and Foxconn. Tata is key to Apple’s growing ambitions in India, where analysts estimate it will account for 20-25% of total iPhone shipments this year, compared with 12-14% last year.

The reasons for Pegatron’s gradual withdrawal from Apple operations, including its India operations, are unclear. Last year, Pegatron said the China factory deal was to raise capital to “optimize its business.”

© Thomson Reuters 2024

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