Tatas to buy stake in Apple partner Pegatron's India business

NEW DELHI: Tata group will buy into the India operations of Apple's manufacturing partner Pegatron almost a year after acquiring the business of another supplier Wistron. The deal will make the company one of the biggest contract suppliers to the American electronics giant, along with Taiwanese giant Foxconn.

Tata group, which has been making inroads into manufacturing ecosystem of Apple and has started making latest generation of iPhone 16, will be buying around 60% in operations of Pegatron.

The diversified conglomerate is expanding into electronics manufacturing eco-system, including making semiconductors in the country.

Questions sent to a spokesperson for Tata Sons were not answered. Apple spokesperson in India also did not respond to questions.

Sources said that talks between Pegatron and Tata Electronics, a group company of the Tata group, had been going on for the past one year as the Taiwanese supplier wanted to induct an Indian partner in view of the low margins of the manufacturing business and challenges in handling the workers' demand.

"Being a contract manufacturer to Apple is not an easy business, and the margins are also very tight. Companies have to ensure top-level manufacturing quality, considering the sophisticated nature of Apple's products, and there cannot be any disruptions in production as supplies are catering to global markets," a top official, who is part of Apple's manufacturing ecosystem, told TOI.

"Iissue of labour management has caused severe concerns among Apple's Taiwanese suppliers. It is a challenge to handle labour in southern India and companies are mostly on the edge in view of the recurring demands made by labour and the unions," the official said, requesting anonymity.

Wistron, which was one of the first of Apple's suppliers to begin manufacturing in India, had faced violence at its factory in late 2020, which saw workers break glass panes and doors and attack the offices of senior officials.

Pegatron is believed to have contributed around 10% to iPhone's India production last year, and has a factory in Tamil Nadu. Tata and Pegatron may be partner for an upcoming factory at Hosur in Tamil Nadu.

Pegatron's India factory is believed to be employing around 10,000 workers and has a capacity to produce five million iPhones every year. Through Wistron, Tata group had acquired an iPhone manufacturing plant in Karnataka.

It is believed that the Tata group and Foxconn will now aggressively expand investments, with Apple increasingly developing India as a strong manufacturing base for iPhones outside China. It is estimated that India manufacturing will contribute nearly 24% to iPhone global production this year, double to what was contributed last year.