Tata Group, a prominent Indian conglomerate, is on the verge of acquiring a factory owned by Wistron, a key supplier to Apple Inc. According to a report by Bloomberg, the deal, expected to be finalized in August 2023, will mark a significant milestone for the Indian company as it enters the realm of iPhone assembly for the first time.
The factory in question is located in the southern state of Karnataka and is valued at over $600 million. After nearly a year of negotiations, Tata Group is close to sealing the agreement. The Wistron factory currently produces the iPhone 14 model and employs over 10,000 workers.
Wistron has committed to ship iPhones worth $1.8 billion by March 2024 to get financial incentives from the state. The iPhone maker has also planned to triple its workforce by next year. Once Tata Group finalizes the deal, it plans to fulfill these commitments.
Wistron’s decision to sell its iPhone assembly factory in India stems from challenges in achieving profitability under Apple’s terms. The company struggled to generate profits solely as an iPhone assembly provider, leading it to focus on its core IT manufacturing operations in other countries like Vietnam and Mexico.
Wistron faced difficulties negotiating higher margins with Apple due to its smaller size than global giants like Foxconn and Pegatron. Inventory management also posed challenges, which larger suppliers handled more effectively. The company’s smaller size and management issues hindered its ability to address these challenges adequately. Cultural differences between China and India also impacted Wistron’s ability to retain workers, resulting in a high attrition rate at its Indian facility.
Wistron is selling its iPhone assembly facility in Kolar to Tata Group as part of its restructuring efforts. Tata aims to enhance the current production capacity of iPhones in the Wistron factory. This move aligns with Tata’s strategy to focus on its core operations and exit the iPhone assembly business in India. Additionally, Tata Group is reportedly conducting trials to assemble upcoming iPhone 15 models in India.
Wistron entered the Indian market in 2008 with a repair facility for various devices. In 2017, the company expanded its operations and began manufacturing iPhones for Apple. Tata Group’s acquisition of the Wistron factory would make it the first Indian company to assemble iPhones in India and for global markets. This move aligns with the Indian government’s long-term goal of boosting India’s reputation in hardware manufacturing through initiatives like “Made in India.” Other smartphone companies, such as Samsung, Xiaomi, and Vivo, have also set up manufacturing facilities in India, contributing to the country’s growing electronics industry.