Through Acquisition:
Tata Electronics Private Limited (TEPL) has signed a Share Purchase Agreement (SPA) to acquire a 100% equity stake in Wistron InfoComm Manufacturing (India) Private Limited (WMMI). For a 100% ownership stake in the company’s assembly lines, it would pay $125 million along with the parent company’s $550 million inter-corporate loan included, the acquisition is valued at $750 million.
The Companies:
Tata Electronics Private Limited (TEPL) is a greenfield venture of the Tata group with expertise in manufacturing precision components. As the only Indian company on Apple’s vendor short list, Tata Electronics is essential to the company’s efforts to diversify its manufacturing operations beyond China, particularly with regard to iPhone enclosures.
Wistron Infocomm is a part of the Taiwanese Wistron group, incorporated in 2018 bagged the contract from Apple to assemble iPhones at its Bangalore plant. The group has 2 other subsidiaries in India, and both will be winding down their operations, representing a complete withdrawal from the country.
The tech giant Apple, with its headquarters in Cupertino, is gradually expanding its exports from India. Apple overtook Samsung as the top smartphone exporter from India in the second quarter of this year, accounting for 49% of the nation’s total shipments as opposed to 45% for its Korean rival. According to estimates, Apple shipped more than $5 billion worth of iPhones from India in the first seven months of FY24 (April through October), a notable 177% increase in sales year over year.
Electronic manufacturing at a glance
- $14.6Bn Export of goods
- $9.9Bn domestic production of components
- $2.2Bn component export
- 100% FDI allowed through automatic route
- 50% Incentive (subjected to ceiling) offered on capex
- Target: ₹24L Cr manufacturing capabilities by 2026
- 90K Startups incl 110 Unicorns.
Tata takeover
The Tata Group entered the iPhone supply chain with a casings facility in Hosur, Tamil Nadu, starting with making a semi-finished iPhone SE model in India. With the acquisition of the Wistron unit, the Tata Group will be able to move into end-to-end assembling of iPhones in
India, becoming the first Indian company to join the ranks of Foxconn, Pegatron, Luxshare and Wistron in making iPhones. Wistron employs over 12000 people in India, most of whom are being acquired by the Tata group.
The Economic Times reported that Wistron was suffering from low profits and work culture mismatch. Wistron wasn’t big enough to get into the more lucrative parts of Apple supply chain, like inventory management leaving Wistron with a low margin. Local workers also often complained about the work hours, requesting a more balanced life instead of working around the clock like many Chinese and Taiwanese employees.
Through Capacity Expansion:
Tata Electronics intends to double the size of its iPhone-casing facility in Hosur as part of a major expansion.
Established with a substantial investment of Rs 5,000 crore, the current Hosur unit occupies 500 acres and employs over 15,000 people. With the planned expansion expected to be finished in the next 12 to 18 months, there will likely be a significant increase in the workforce, with 25,000–28,000 people working at the consolidated site.
Looking Forward
“The EMS (Electronic Manufacturing Services) industry in India is poised for growth given the strong support from the Government, and we are happy to be participating in this growth story. We are focused on strengthening our capabilities in the manufacturing sector.” Dr Randhir Thakur, CEO and Managing Director of Tata Electronics said in a statement.
It is also inline with the Production Linked Incentive (PLI) scheme put forward by the government, which offers to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components, including Assembly, Testing, Marking and Packaging (ATMP) units. The scheme played a big part in Winstron and other electronics manufacturers coming to India.
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