InvestorQ : Is it true that the Tatas are planning to manufacture iPhones in India and when is it likely to start off?
Rutuja Nigam made post

Is it true that the Tatas are planning to manufacture iPhones in India and when is it likely to start off?

3 weeks ago

Tata group, India’s largest business group by market cap, is in advanced stages of talks with the Wistron group of Taiwan to establish a joint venture for the manufacture iPhones in India. Wistron is one of the largest original equipment manufacturer for Apple based out of Taiwan and competes with the likes of Foxconn and Pegatron for a share of the Apple outsourcing business. Wistron already has a full-fledged plant in India and contract manufactures iPhones for Apple Inc. Tatas may take a stake in Wistron India.

A relationship at this stage would suit the interests of the Tatas and the Wistron group. Both are seriously looking at a larger role to play in the electronics and mobile devices space in India. Tata Electronics already has a manufacturing facility in Tamil Nadu, where it has been progressively working with Apple to design and manufacture mechanical parts for iPhone over the last 2 years. Apple, on its part, has been trying to enhance the value addition in its iPhone from 18-20% on an average to about 25%.

Of course, one big incentive for these kinds of companies is the product linked incentive (PLI) scheme announced by the Indian government which links incentives to the quantum of production. For Tatas, a successful progress would mean that their company becomes an integral part of the Apple supply chain. For Apple also it makes as it would reduce their overt dependence on China, which has been a major bone of contention for most of the American and Western European companies. They are looking to reduce China reliance.

Tata Electronics is venturing into the semiconductor space, a key input element for mobile phones. The idea is to also address the global chip shortage. Tata Electronics may set up an outsourced semiconductor assembly and testing (OSAT), which is one step beyond a fab plant. Wistron is also looking to replicate the success that Foxconn has enjoyed in the Indian context and for that the Tata partnership is the key. Apart from iPhones and semiconductors, another area of collaboration could be electrical vehicles (EV).