Tata Electronics Expands Its Footprint in India

Tata Electronics has made a significant move in the electronics manufacturing sector by acquiring a 60% stake in Pegatron Technology India, a Taiwanese contract manufacturer. This acquisition is particularly noteworthy as Pegatron operates an iPhone manufacturing plant in Tamil Nadu. The deal follows Tata’s earlier acquisition of Wistron’s operations in Karnataka, marking a strategic expansion in the Indian market. While the financial details of this transaction remain undisclosed, it positions Tata Electronics as a key supplier for Apple, alongside Foxconn, another major Taiwanese manufacturer.
Approval from Competition Commission of India
On January 7, the Competition Commission of India (CCI) approved Tata Electronics’ acquisition of a majority stake in Pegatron Technology India. This approval also includes the proposed business transfer of TEL Components, Pegatron’s subsidiary, to the Indian unit. The CCI noted that TEL Components is in the process of establishing a greenfield facility dedicated to smartphone electronics manufacturing. This facility is expected to enhance Tata Electronics’ capabilities and contribute significantly to the local economy.
Pegatron Technology India plays a crucial role in Apple’s supply chain, contributing approximately 10% of iPhone production in India. The Chennai facility has a production capacity of five million iPhones annually and employs around 10,000 people. This facility not only serves the Indian market but also exports electronic products to Apple’s operations across North America, Asia, and Europe. The collaboration between Tata Electronics and Pegatron is set to merge their teams, which will likely lead to increased efficiency and innovation in production.
Strategic Collaboration and Rebranding
In a statement released by Tata Sons, the company announced plans to merge the teams of Tata Electronics and Pegatron Technology India. This collaboration aims to leverage the strengths of both companies to enhance production capabilities. As part of this transition, Pegatron Technology India will undergo rebranding to reflect its new ownership structure. Previously, Tata Electronics renamed Wistron Infocomm Manufacturing (India) to Tata Electronics Systems Solutions, indicating a trend of rebranding within the conglomerate.
The negotiations between Tata Group and Pegatron have been ongoing for several quarters. Pegatron sought a local partner due to challenges such as slim profit margins and workforce management issues. Notably, Wistron faced worker unrest at its facility in late 2020, which resulted in property damage and attacks on senior executives. Tata’s involvement is expected to stabilize operations and improve working conditions, benefiting both the workforce and the overall production environment.
Diversification and Future Prospects
Tata Electronics is not only focusing on Apple but is also negotiating with Chinese smartphone manufacturers like Xiaomi and Oppo to produce components. This strategy aims to diversify its business model and reduce reliance on a single client. Tata Group has initiated ventures into various sectors, including electronic and semiconductor manufacturing, healthcare, and battery manufacturing. These initiatives were largely a response to the disruptions caused by the COVID-19 pandemic.
The conglomerate views these new enterprises as vital for its expansion and development. By diversifying its operations, Tata Electronics aims to create a robust business model similar to that of Foxconn, which has successfully established itself as a leading player in the electronics manufacturing sector. This strategic move not only strengthens Tata’s position in the market but also contributes to the growth of India’s electronics manufacturing ecosystem.
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