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Tata Group Makes History by Becoming the First Indian Company to Manufacture Apple iPhones

Pioneering Move in iPhone Manufacturing, Tata acquired Wistron’s operation in India 

  INTRODUCTION

Tata to manufacture iPhone

In a historic and pioneering move for both India and Apple Inc., Tata Electronics Pvt Ltd (TEPL), a manufacturing arm of the Tata Group, has achieved a groundbreaking feat by acquiring Wistron’s operations in India. The $125 million (Rs 1,000 crore) deal marks a pivotal shift in Apple’s global manufacturing strategy, as it gears up to manufacture iPhones in India, targeting both the domestic and global markets. This landmark development underlines India’s rapidly advancing production capabilities and highlights the country’s pivotal role in Apple’s diversification plans.

“@GoI_MeitY stands fully in support in growth of Global Indian Electronics companies that will in turn support global Electronic brands that want to make India their trusted manufacturing and talent partner and to realise PM’s goal of making India a global electronics power,”  Rajeev Chandrasekhar Minister of State for Electronics and Information Technology of India, posted on X, the microblogging site. 

Tata to manufacture iPhone
Rajeev Chandrashekhar, MoS, Electronics and Information Technology

 

Tata Group’s Entry into Apple’s Ecosystem

Tata to manufacture iPhone

India’s Minister of Electronics and IT, Rajeev Chandrasekhar, announced that the Tata Group will officially begin manufacturing iPhones for both domestic and global markets, having taken over Wistron’s operations. Wistron had committed to supplying Apple iPhones worth $1.8 billion from its Karnataka factory, which will now be honored by Tata Group.

Tata Group will also aim to produce the iPhone 15 domestically, with trial runs for parts assembly underway at its Hosur plant in Tamil Nadu. The goal is to achieve mass production of the iPhone 15 at a rate of 50,000 units per day.

 

A Glimpse into Wistron’s Indian Operations

Tata to manufacture iPhone

Wistron’s operations in India are far from inconsequential. Presently, they operate four assembly lines dedicated to the production of the iPhone 14 at their sprawling plant situated in the Kolar industrial area. This facility is home to a dedicated workforce of approximately 14,000 to 15,000 employees.

This significant production capacity underscores Apple’s deepening engagement with the Indian market. While one facility in Peenya, Bengaluru, is currently inactive, and another primarily serves as a center for the repair and maintenance of Apple products, Wistron had ambitious plans for expansion. They were on the cusp of opening a new manufacturing facility in Kolar, with production slated to commence in January 2024.

 

Apple’s Strategic Diversification and India’s Growing Significance

particularly noteworthy, especially in light of ongoing trade tensions between Washington and Beijing. This diversification decisively solidifies India’s growing importance in Apple’s global strategy. Union Commerce and Industry Minister Piyush Goyal recently disclosed that Apple exported an impressive $5 billion worth of goods from India in 2022, showcasing the company’s deep commitment to the Indian market. Furthermore, Apple has unveiled plans to manufacture a substantial 25% of its global units within India over the next four to five years. This strategic move reinforces India’s role as a significant partner in Apple’s future manufacturing endeavors.

Tata to manufacture iPhone

Piyush Goyal, Union Minister

Apple’s Rise as a Leading Smartphone Exporter in India

Tata to manufacture iPhone

In a remarkable development, during the June 2023 quarter, Apple overtook Samsung to become the leading smartphone exporter from India. According to reports, Apple secured a dominant market share of 49 percent, while Samsung held a slightly lower market share of 45 percent out of the total 12 million shipments originating from India.

 

India Emerges as a Key Manufacturing Hub

Tata to manufacture iPhone

Apple commenced smartphone assembly in India through contract manufacturers back in 2017. Initially, this was limited to entry-level and legacy handsets, but a significant shift occurred in 2021-22 when the production of iPhone 14 models began in India.

During the months spanning from April to December 2022, Apple’s contract manufacturers exported more than $2.5 billion worth of iPhones from India, nearly doubling the previous fiscal year’s total. Notably, Foxconn Technology Group and Wistron Corp each shipped over $1 billion worth of iPhones abroad in the first nine months of FY 2022-23, while Pegatron Corp, Apple’s third contract manufacturer in India, was on track to export around $500 million worth of devices.

 

Government Initiatives Fueling India’s Rise in Manufacturing

The move aligns seamlessly with the overarching goals of the Indian government, particularly championed by Prime Minister Narendra Modi, to bolster local manufacturing. India’s Incentives for Apple and Its Partners played a significant role in attracting the big companies. India has actively worked to attract new investments, particularly through its Production-Linked Incentives (PLI) scheme and initiatives targeting IT and electronics manufacturing. Since the PLI scheme was initiated in August 2021, Apple’s contract manufacturers and component suppliers have created a cumulative 50,000 direct jobs and possibly up to 100,000 indirect jobs, as reported on a quarterly basis by PLI scheme beneficiaries.

The availability of PLI subsidies and a significant pool of low-cost labor has made India an attractive location for electronics manufacturing, attracting Apple’s partners such as Foxconn, Pegatron, and Wistron.

 

Reducing the Dependency on China 

Tata to manufacture iPhone

Apple, along with many other Western companies, is actively working to decrease its dependence on China as a primary production hub. This strategic shift has been triggered by the ongoing trade disputes between the US and China and the potential for further trade restrictions related to China worldwide.

At one point, a significant 85 percent of Apple’s ‘Pro lineup’ of iPhones were manufactured in Zhengzhou, China, at the massive Foxconn factory, where approximately 300,000 workers are involved in producing Apple devices.

New Delhi is striving to attract investment, and this effort is bolstered by the ‘China Plus One’ strategy, wherein companies aim to reduce their reliance on Chinese production facilities by expanding their manufacturing operations in other countries. Apple has already taken steps to instruct its contract manufacturers to relocate some of their production out of China to mitigate the impact of ongoing trade tensions between the US and China.

Several factors are contributing to the diminishing appeal of China as a manufacturing hub;

1. The abundance of labor in China has decreased, and labor costs have risen significantly as the country has developed. This trend is further influenced by China’s aging population.

2. The disruptions caused by COVID-19, which resulted in supply chain bottlenecks and factory shutdowns, have accelerated the transition away from China.

Nonetheless, Apple cannot make immediate, large-scale moves out of China, given its reliance on key manufacturing and assembly partners such as Luxshare Precision, responsible for producing AirPods, the Apple Watch, iPhone 15, iPhone Pro Max, and the MR headset set to be available to consumers in 2024. The transition away from China is likely to be a gradual and calculated process, with companies exploring alternative production sites while maintaining critical partnerships in China.

 

A Bright Future for India’s Electronics Industry and the Global Market

Tata to manufacture iPhone
The Prime Minister, Shri Narendra Modi releasing the logo at the inauguration of the ‘MAKE IN INDIA’ in New Delhi, September 2014

 

This historic partnership between Tata Group and Apple foretells a bright and promising future for the Indian electronics industry and the global market. It is not only a testament to India’s manufacturing prowess but also a powerful demonstration of the increasing trust that tech giants like Apple are investing in India’s potential as a hub for smartphone production and export. Tata Group’s acquisition marks a significant turning point in India’s “Make in India” campaign and stands as a milestone for the country’s economic growth and technological advancement.

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