Highlights:
- The Tata-Wistron deal is valued at over $600 million.
- Apple supplier Wistron’s Karnataka factory houses over 10,000 employees and is known for iPhone production.
- iPhones worth $1.8 billion are to be shipped by Wistron under the deal.
Indian multinational conglomerate, Tata Group will be closing in on a deal with tech giant, Apple’s supplier factory. The deal is anticipated to be finalized by August 2023 according to a report by Bloomberg. Tata’s Wistron acquisition, valued at over $600 million (approx.. Rs 4,900 Crores) would make it the maiden local company to make it to the list of iPhone assembly. The deal is an output of negotiations that spanned several years.
The iPhone manufacturing facility located in the southern state of Karnataka hosts more than 10,000 workers. Tata might accelerate the expansion of the factory by hiring more employees post its acquisition. The Taiwan-based electronics manufacturer, Wistron has promised an iPhone shipment worth $1.8 billion (approx.. 14,800 Crores) from its Karnataka outlet in India in the fiscal year through March 2024, following the finalisation of the deal. Plans to amp up the workforce by 3x are also underway.
Wistron penetrated the Indian market in 2008 as a repair establishment for electronic devices. In 2017, the firm kickstarted iPhone manufacturing under Apple. It encountered several issues in attaining profitability under the terms laid down by Apple. Hence, it decided to sell its Indian iPhone assembly factory. Failure to generate profits as an iPhone assembly provider contributed to its decision to focus solely on IT operations in countries like Vietnam and Mexico.
Apple’s diversification plans of expanding its base beyond China will be boosted by the launch of an Indian iPhone. In the three months that ended June 30, Wistron exported about $500 million (approximately Rs. 4,100 crores) worth of iPhones from India, and Foxconn Technology Group and Pegatron, two of Apple’s major Taiwanese suppliers, have also increased local production.
Since Prime Minister Narendra Modi’s launch of government-backed initiatives with generous financial incentives to increase production and employment, India has made strides in domestic manufacturing. Following China’s Covid aftermath and the escalating tensions between Washington and Beijing, Apple has intensified attempts to diversify away from China.
Wistron’s smaller size compared to global behemoths like Foxconn and Megatron hindered its success in securing higher margins with Apple and all negotiation efforts proved to be futile. Additionally, Witsron also faced challenges in inventory management in contrast to bigger supplies which handled these demands with ease.
