As the world witnesses the rapid shift in global supply chains triggered by the impending commencement of Donald Trump's second term, India has taken a significant step by approving Tata Electronics' acquisition of Pegatron India. This move comes in response to concerns that the relocation of Apple's supply chain to India has been progressing at a sluggish pace.
According to a post on X, the Commission of Competition of India (CCI) has given the green light to Tata Electronics to acquire a significant shareholding in Pegatron Technology India. This decision also includes the approval for the transfer of TEL Components Pvt. Ltd.'s business operations to Pegatron India. The approval marks a pivotal movement in India's rapidly evolving electronics manufacturing sector.
Tata Electronics, a key player in the Indian electronics landscape, aims to strengthen its position through this strategic acquisition. Pegatron India, a subsidiary of Taiwanese electronics giant Pegatron, is known for its advanced manufacturing capabilities and cutting-edge technology solutions. The move is expected to enhance Tata Electronics' competitiveness by leveraging Pegatron India's expertise and infrastructure.
The transfer of TEL Components' business to Pegatron India is seen as a crucial step in consolidating operations and improving efficiency. This consolidation is expected to streamline production processes and foster innovation, potentially boosting exports and reinforcing India's status as a global manufacturing hub.
This transaction is set against the backdrop of India's growing emphasis on self-reliance in electronics manufacturing, aligning with the government's Make in India initiative. By enabling such strategic partnerships, the CCI continues to pave the way for advancements in the nation's industrial capabilities and economic expansion.
In November 2024, sources informed Reuters that Tata Electronics had reached an agreement to acquire a majority stake in Pegatron India. This strategic move would likely position Foxconn and Tata as the two primary iPhone assemblers in India, following Tata's completion of the acquisition of Wistron's iPhone manufacturing business in late 2023.
Apple supply chain's slow relocation into India
CCI's approval came amid Donald Trump's preparation for his second term as President of the US. He pledged to impose tariffs on imported goods from the country's trade partners, creating pressure for Apple, which faced the prospect of renewed tariff increases. This situation was reminiscent of 2018 when Trump imposed significant tariff hikes on products imported from China, which also impacted Apple then.
Amid the threat of increased tariffs, the technology supply chain could hasten its shift away from China.
According to Bloomberg Intelligence, the EMS industry's fixed-asset exposure to China, dominated by companies like Foxconn and Quanta, has significantly decreased from 65% in 2018 to 48% in 2023, a trend where businesses look to diversify operations beyond China's borders.
As global EMS and ODM firms continue to reduce their reliance on China and expand into other regions like India, Bloomberg Intelligence believes Apple's slower pace in altering its supply chain may render it more vulnerable to these developments, in contrast to competitors like Samsung.
According to the consultancy, Apple is pressured to diversify its manufacturing because over 80% of iPhones are assembled in China. While Apple, along with Samsung and Motorola, controls more than 82% of the US smartphone market, Apple is moving to India to produce iPhones through partnerships with Foxconn, Tata, and Pegatron. However, progress is slow due to local supply chain issues. In contrast, Samsung is better positioned for tariff challenges, with major production facilities in Vietnam and expanding operations in India.
Pegatron to diversify into EV and communication in India
On the other hand, in early 2025, Pegatron announced a five-year plan starting from 2024, building upon its existing business foundation while expanding into emerging technologies such as AI servers, augmented reality, and robotics—areas identified as key drivers of future growth. Besides, the company expects the electric vehicle market to stabilize, helping improve the prospect of its automotive electronics business.
In India, the company announced that its expansion signifies strategic flexibility, with plans to open new facilities for EVs and communication systems. These are anticipated to commence operations by mid-2025 and will focus on catering to local markets.
Source: IDC, January 2025