SUMMARY
The US-based tech major has been looking to move more and more production away from China amid rising US-China tensions
Tata has set up the production of iPhone chassis components in south India
Apple has set an India production target of INR 47,000 Cr (around $615 Mn) for the current fiscal
Tata Group is reportedly in discussions with Wistron to establish a manufacturing joint venture for assembling iPhones in India.
A Bloomberg Quint report noted the deal is still under development and there are no details on aspects such as shareholdings. However, the deal might include Tata buying equity in Wistron India’s operations. It could also be that the two companies might end up forming a new entity and establishing a manufacturing plant.
According to the source cited in the aforementioned report, the two companies could also execute a strategy including both options. If the deal goes through, Tata could become the first Indian company to build iPhones, joining the likes of the Taiwanese majors Wistron and Foxconn who already have production set up in India.
While it is still unclear whether Apple is in the know, but the US-based tech major has been looking to move more and more production away from China amid the rising US-China tensions.
The move could also prompt other international companies to consider setting up shop in India to reduce their China dependence when the Taiwan question is intensifying. Amid rising geopolitical tensions, it is safe to assume that if a conflict breaks out in Asia, supply chains that depend on China will be heavily impacted.
Interestingly, the Bloomberg report noted that Tata has already had its initiation in the smartphone manufacturing industry as it has set up the production of iPhone chassis components in south India.
This deal would also prove to be important for Wistron, as its India business sags under mounting losses. Tata forms a strong local partner with deep pockets and also comes with subject matter expertise; it manufactures a very wide range of products.
The development comes as it was widely reported last month that Apple was going to manufacture iPhone 14 in India, in a bid to shorten the production timeline. With Apple recently launching the iPhone 14 series of smartphones, it is reasonable to expect the tech major to ramp up production when the demand is high.
India has been bullish to attract global manufacturing as China seems to stagger at the top, with Apple being one of the prime targets. Late last year, New Delhi asked the tech giant to take its annual production output to $5 Bn over the next five years. Soon thereafter, Apple set an India production target of INR 47,000 Cr (around $615 Mn) for the current fiscal.
The country is fast becoming a lucrative market for Apple. In the quarter that ended June 30, 2022, the tech major saw its revenue double. Per a report by CyberMedia Research, Apple sold over 1.2 Mn iPhones in India in Q2 2022, 94% higher than the corresponding quarter last year.
According to research firm Counterpoint, India made about 3.1% of the world’s iPhones in 2022, with the share set to reach 6-7% this year. However, China still manufactures 90% of all iPhones in the world.
Wistron started manufacturing iPhones in India in 2017 at a production plant in Bengaluru. However, Wistron saw violence erupt at its plant in 2020 after workers alleged to be underpaid. The violence set the company back around $7 Mn, but Wistron admitted to some of the allegations.
