Pegatron in talks with Tata to sell its only India iPhone plant, sources say

Wistron

08/04/2024 12:06

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      Taiwan's Pegatron reducing its Apple iPhone business
    

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      Tata eyeing key Pegatron India plant to boost its
plans-sources
    

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      Tata already has two planned iPhone assembly plants
    

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      Deal with Pegatron could take six months to close-source
    

  
    By Munsif Vengattil and Aditya Kalra
       BENGALURU/NEW DELHI, April 8 (Reuters) - Pegatron
 4938.TW  is in advanced talks to hand over control of its only
iPhone manufacturing facility in India to the Tata Group, said
two sources with direct knowledge, marking the Taiwanese firm's
latest scale back of its Apple  AAPL.O  partnership.
    Under the deal, which has received the backing of Apple,
Tata plans to hold at least a 65% stake in a joint venture that
will operate the Pegatron plant near Chennai city in the
southern Indian state of Tamil Nadu, with the Taiwanese firm
providing technical support and holding the rest, one of the
sources said.
    Tata, one the largest conglomerates in India, will operate
the joint venture through its Tata Electronics unit, the second
source said.
    The Pegatron India factory has around 10,000 employees and
makes 5 million iPhones annually. It is the last such facility
operated by the firm after it forfeited control of an iPhone
plant in China last year to rival Luxshare  002475.SZ  in a $290
million deal.
    Tata and Pegatron did not respond to emailed requests for
comments. Apple declined to comment. The sources did not share
financial details of the ongoing negotiations.
    Apple is increasingly looking to diversify its supply chain
beyond China amid geopolitical tensions between Beijing and
Washington. For India's Tata, the Chennai Pegatron plant will 
bolster its iPhone manufacturing plans.
    Tata already operates an iPhone assembly plant in the
neighbouring southern state of Karnataka, which it took over
from Taiwan's Wistron  3231.TW  last year, and is also building
another in Hosur in Tamil Nadu, where Pegatron is likely to
emerge as its joint venture partner.
    Pegatron has for months also been building another iPhone
factory at its Chennai campus, and the Tata deal talks include
taking over that facility as well, the first source said. 
    The talks between Tata and Pegatron for the factory are
expected to close in six months and will see all of the Pegatron
India employees move to the joint venture entity, the first
source added.
    Apple's iPhone contract manufacturers in India currently
include Tata, Pegatron and Foxconn  2317.TW . Tata is key to
Apple's growing ambitions in India, which analysts estimate will
contribute 20-25% of total iPhone shipments this year, from
12-14% last year.     
    The reasons for Pegatron's gradual withdrawal from its Apple
business, including in India, were not known. Last year,
Pegatron said the China plant deal was done to raise capital to
"optimise its business".

 (Reporting by Munsif Vengattil in Bengaluru and Aditya Kalra in
New Delhi; Additional reporting by Ben Blanchard)
 ((munsif.vengattil@thomsonreuters.com))