Tata Electronics is set to acquire 100 percent of Wistron Corporation’s indirect stake in its Indian venture for $125 million – a deal that will catapult the Tatas into a globally exclusive club of iPhone assemblers. The deal will enable Tata Electronics to become the country’s first homegrown iPhone maker.
The board of Wistron Corporation, the world’s third largest electronics manufacturing services (EMS) player, on Friday approved a proposal from its two subsidiaries, which jointly own the Taiwanese company’s Indian business – Wistron InfoComm Manufacturing (India) Pvt Ltd – to sell the company. to Tata Electronics through a share purchase agreement. The Indian company operates the iPhone factory in Narasapura, near Bengaluru.
However, at the same time, SMS InfoComm (Singapore) Pte Ltd, one of Wistron Corp’s two subsidiaries, has announced a proposal to convert a $130.26 million loan (including accrued interest) it had extended to the Indian company in equity.
While the conversion price is not known, sources say this could mean Wistron may continue to hold a minority stake in the Indian unit.
Following the deal, Tata Electronics would become the first Indian company to join Apple Inc’s exclusive list of currently four global suppliers that assemble the iPhone. Besides Wistron, Taiwanese players Foxconn and Pegatron and Chinese company Luxshare are on the list.
The significance of the deal can be gauged from the fact that 7 percent of global iPhone production has already shifted from China to India, and the target is to reach around 18 to 20 percent by FY26.
Commenting on the development, Union Electronics and IT Minister Ashwani Vaishnaw said, “It is another important step in mobile manufacturing. This acquisition will further strengthen mobile manufacturing in the country.” The Tatas declined to comment.
Wistron, apart from Foxconn and Pegatron, has been one of the major players in the country’s assembly of iPhones in Karnataka, and is eligible for incentives under the mobile device production-linked incentive programme. It produces the iPhone 14 in the country. According to data from S&P Global Intelligence, Wistron was the second-largest exporter of iPhones from India after Foxconn, with revenue increasing to $1.98 billion in FY23, up from $0.71 billion in FY22; it accounted for 36 percent of the country’s iPhone exports. According to the sources, more than 90 percent of Wistron’s production in India was exported.
The company, according to the sources, has already invested Rs 1,250 crore in setting up the factory and employs more than 12,000 workers – a figure it planned to triple. However, the company faced labor problems at the factory, with workers protesting allegedly unpaid wages and long working hours.
The Tatas are not new to the business world with Apple and have a clear strategy to become a major player in electronics and semiconductors. They have been a key partner of the Cupertino-headquartered company, which is looking to build a local supply chain so it can increase value addition in iPhones, something it promised would reach 40 percent by the end of the five years. years of PLI scheme. Currently, the local value addition is 12 to 15 percent, according to the sources.
Apple partnered with Tata Electronics to supply iPhone cases, which represent 9 to 12 percent of the total production costs. After a two-three year learning curve to reduce the rejection rate, the Tatas are now exporting the Indian-made cases to Chinese assemblers of the iPhone. The Wistron deal will provide another opportunity to become a global EMS player.
The Tatas have also announced they are interested in semiconductor opportunities, including manufacturing plants, but have not provided details on their plans.
For Wistron, stopping assembling iPhones is not new. It did this in Vietnam, where in 2020 it sold its two iPhone factories to Chinese EMS player Luxshare, which is increasingly becoming an important Apple supplier after Foxconn.
Wistron’s India trip
2017: The first EMS player to come to India to assemble iPhones
2020: withdraws from China and Vietnam; sells iPhone factories to Luxshare
2021: Emerges as a player eligible for production-related incentives. Last year it even assembled iPhone 11, 13 and 14
2022: Starts negotiations with the Tatas to sell the factory in Karnataka
2023: Wistron’s board approves the sale of the factory to the Tatas