Tata Group in talks with Wistron for manufacturing iPhones in India
The Tatas have had preliminary talks with Taipei-headquartered Wistron to establish a joint venture to manufacture iPhones in India, according to a Bloomberg report. The salt-to-software conglomerate could possibly acquire a stake in the Indian unit of the Taiwanese OEM (original equipment manufacturer).
While the Tatas did not comment, sources close to Cupertino-based Apple said they were unaware and not part of any such talks. They pointed out that their vendors were free to talk to other companies and come to them if something was in the offing. There was no official comment from Apple.
Both Tatas and Wistron have been looking at a larger play in the electronics and mobile devices space in the country. Tata Electronics Pvt Ltd, which has a manufacturing facility in Tamil Nadu, has been working with Apple to design and manufacture mechanical parts for iPhone for nearly two years, according to people in the know.
The work in progress is significant and experts in the business say that manufacturing of mechanical parts in the country could help Apple increase the value addition of iPhone by around 5 to 6 per cent. Currently, the value addition with respect to iPhone is 18 to 20 per cent.
The government is expecting the PLI-eligible companies to hit a value addition of 35 per cent by the end of the fifth year of the scheme. Once the experiment is successful, Tatas could become a part of the large global supply chain of Apple.
At present, the supply chain is concentrated in China. Due to closure of factories in China during the pandemic, India is looking attractive as an alternative manufacturing centre, according to analysts.
Tata Electronics is also venturing into the semi conductor space-a key element in building mobile devices. Tata Electronics is planning to set up an outsourced semi conductor assembly and test (OSAT). That’s typically a step ahead of getting into a fab plant for a company.
For Wistron, India is yet another battle ground where it faces rivals such as Foxconn and Pegatron.
As contract manufacturers for Apple, they are covered under the PLI incentive scheme. Foxconn has two companies in the country. One is exclusively for Apple (Hon Hai ) and the second (Rising Star) manufactures for non-Apple mobile device companies including Xiaomi.
Wistron has charted out a similar strategy. While it has a plant exclusively for Apple, it also tied up in a strategic alliance late last year with Delhi-based Optiemus (which is eligible for PLI scheme for mobile devices, IT products and telecom products) to manufacture mobile devices for non-Apple customers, contract manufacture IT hardware and telecom products.
Electric vehicle space could be another common area, where the Tatas are the biggest players in the passenger car segment. Foxconn chairman Liu Young said last year that the company was open to set up a manufacturing plant for EVs in the country. Wistron also announced an entry into the space along with a partner.
Through the alliance with Optiemus (where it had a financial minority stake earlier but sold it back to the Indian promoter), Wistron is looking at contract manufacturing a range of other products including wearables, laptops and smart meters.