Tata Is Emerging As 'India’s Foxconn' In Apple’s New Supply Chain

Tata has recently agreed to acquire a 60 per cent majority stake in Pegatron’s iPhone facility in Tamil Nadu, creating a new joint venture with the Taiwanese contract manufacturing giant.

Pegatron, responsible for around 10 per cent of India’s iPhone production last year, is one of Apple’s top contract manufacturers, with its Indian plant employing approximately 10,000 people and producing around 5 million iPhones annually.

This acquisition cements Tata’s growing role as an Apple supplier within India.

It adds to the iPhone assembly facility Tata took over from Wistron in October 2023. The group secured a 100 per cent stake in the Wistron unit for an estimated $125 million.

The company’s ambitious expansion plans also include a new facility in Hosur, Tamil Nadu, where Pegatron is likely to join as a partner.

With three manufacturing facilities under its control, Tata Electronics is on track to become one of Apple’s largest suppliers, placing itself as a key player in Apple’s global supply chain, while challenging established players like Taiwan’s Foxconn.

Tata’s entrance into iPhone assembling also makes it the first Indian company to enter Apple’s traditionally China-centred supply chain.

Until recently, Apple relied on Foxconn for up to 90 per cent of its iPhone production, mostly concentrated at its Zhengzhou facility, known as “iPhone City.”

However, increasing challenges in China such as rising labour costs, supply chain disruptions, and mounting geopolitical tensions, prompted the tech giant to explore production alternatives.

India, with its favourable economic policies, large workforce, and rapidly improving infrastructure, has become an attractive alternative.

The government’s Production-Linked Incentive (PLI) scheme, which offers financial incentives for local manufacturing, has acted crucial in attracting Apple, as well as its suppliers, including Foxconn and now Tata Electronics.

Since its launch, this scheme has driven close to $1.5 billion in electronics industry investments in India, according to the Ministry of Electronics and Information Technology.

By securing a majority stake in Pegatron’s plant, Tata will be majorly expanding its capability to produce iPhones not only for India but also for global markets, further solidifying its role in the tech giant’s supply chain.

Similar to Foxconn’s set up in China, Tata group is setting high standards for its Tamil Nadu operations.

The company is making investments in advanced manufacturing technology and workforce training to align with Apple’s rigorous quality requirements.

The 250-acre Hosur plant, in full, would hire 50,000 blue-collared employees, majority women. In terms of staff strength, it would be second only to Foxconn's Apple iPhone facility in Tamil Nadu.

With these developments, the group continues to be at centre in India’s growing share of global iPhone production.

According to a report in the Wall Street Journal, Apple and its suppliers have set a goal to manufacture over 50 million iPhones annually in India over the next two to three years, a target that Tata’s expanding production capabilities could help achieve.

The groups strategic acquisitions and expansions position it at the forefront of this shift, helping India emerge as a competitive alternative to China in high-tech manufacturing.

The Tech giant exported nearly $6 billion worth of India-made iPhones in the April- September 2024 quarter. This represents a 33 per cent increase in value compared to last year's period, setting Apple on track to exceed $10 billion in exports by the end of this fiscal year.

If the trend continues, India’s contribution to global iPhone production could reach nearly 24 per cent this year, more than doubling its output from last year.