Introduction
From producing steel to selling salt to providing consultancy services, this 155-year-old Tata Group conglomerate has always been a titan. The Tata Group, with its wide range of services, has shown time and again its knack for adaptation and success.
Its collaborations with international companies, including Starbucks, speak volumes about its global aspirations and dedication to quality. Now, Tata Group is on the brink of a groundbreaking step that could transform India’s tech scene: setting up the nation’s largest iPhone factory.
Let’s dig deeper into this deal.
Tata-Wistron deal
In a significant move in October 2023, Tata Electronics Pvt Ltd (TEPL), one of the Tata Group subsidiaries, took over the operations of Wistron InfoComm Manufacturing (India) Pvt, a Taiwanese electronics firm. This acquisition, worth $125 million (Rs 1,000 crore), marked Tata Group’s entry as the first Indian company to manufacture iPhones domestically.
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The deal was sealed with the approval of the sale of Wistron’s manufacturing plant located in the southern region of India, near Bangalore, Karnataka. With this strategic acquisition, Tata Group is set to commence the production of iPhones for both the Indian and international markets.
Previously, the assembly of Apple’s iPhones was predominantly handled by Taiwanese manufacturing powerhouses such as Pegatron Corp. and Foxconn Technology Group. However, a shift is on the horizon.
With its recent acquisition, Tata Group is gearing up to set up one of India’s largest apple manufacturing plants. This move aligns perfectly with Apple’s objective to broaden its manufacturing roots in the country. It’s a new chapter in the making!
Largest iPhone plant in India
The Tata Group, which already runs an iPhone production plant in Bangalore, Karnataka, acquired from Wistron, is looking to broaden its horizons.
According to Tata Group news, they are planning to set up one of the largest iPhone assembly plants in India, which aligns with Apple Inc.’s ambition to increase its manufacturing footprint in India.
The apple manufacturing plant in India is set to be located in Hosur, Tamil Nadu. The plan is to set up about 20 assembly lines and create jobs for around 50,000 people in the next few years. The goal is to get the facility up and running in about a year to a half.
While the upcoming plant might not be as large as some of the iPhone factories around the globe, it has the potential to be one of the biggest in India. But let’s not forget that it will still be quite a bit smaller than China’s largest iPhone manufacturing facilities.
In addition to constructing a second factory, the Tata Group is ramping up hiring at its existing facility in Hosur. It produces iPhone enclosures in this facility. Tata has also revealed plans to launch 100 retail stores solely dedicated to Apple products. All this has caused the Tata Group’s share price to surge.
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How will the deal strengthen Apple’s supply chain localisation?
Over the years, Apple has been progressively expanding its production presence in India. It is making around 7% of iPhones and sourcing parts locally to reduce its dependence on China.
The expansion of the plant will not only boost Apple’s efforts to localise its supply chain but also strengthen its ties with Tata. Apple is spreading its wings beyond China. To do this, it collaborates with assembly and component manufacturing partners in countries like Thailand, India, Malaysia, and more.
Further, Foxconn, one of Apple’s key manufacturing partners, is investing significantly in India. It is planning to set up a new factory in Karnataka, capable of producing iPhones every year. Plans for another factory of similar capacity are also underway.
As per a Wall Street Journal report dated December 7, Apple and its suppliers aim to manufacture more than 50 million iPhones annually in India in the next two to three years. This would account for 25% of global production by 2030. However, China is expected to retain its position as the largest producer.
Impact on employment
Tata’s game-changing move will not only support the tech giant Apple but also have a profound impact on employment in India.
To give you a bit of background, the Wistron factory that Tata took over is home to more than 10,000 employees. There’s buzz that Tata Group has big plans for its iPhone-casing factory in Hosur, India.
They are looking to double its size! This expansion is set to spread across 500 acres of land and is anticipated to employ over 15,000 individuals. With this, the total workforce could rise to a whopping 28,000.
Role of government
The production-linked incentives (PLIs) introduced by the Prime Minister have motivated key Apple suppliers, including Pegatron Corp. and Foxconn Technology Group, to broaden their activities in India.
This has resulted in a significant boost in iPhone assembly in the country, exceeding $7 billion last fiscal year and accounting for about 7% of the device’s worldwide production.
As the new factory is set to start operations just when the previous government-backed financial incentives are about to end, Apple and Tata are expected to request government subsidies to aid its setup and expansion.
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Bottomline
India’s EMS (Electronics Manufacturing Service) industry is on the verge of substantial growth in the medium term. This growth is fueled by India’s increasing domestic demand, the government’s emphasis on local manufacturing, policy support such as lower taxes and production-linked incentive schemes, and export opportunities driven by the China + 1 strategy of global players.
Numerous companies are wagering on transforming India into a worldwide manufacturing centre and reducing their dependence on China. The acquisition of Wistron will trigger the next investment cycle in the Indian electronics manufacturing ecosystem, indicating the maturation of India’s contract manufacturing firms.
