Tata Group is on the verge of finalizing a deal to acquire a prominent Apple Inc. supplier's factory. A report by Bloomberg has claimed that the agreement could be sealed as early as August 2023. If successful, this move would mark a significant milestone as it would be the first time a local Indian company enters the realm of iPhone assembly.
The target of Tata's acquisition is the Wistron factory located in the southern state of Karnataka. Valued at over $600 million, the deal has been the result of nearly a year's worth of negotiations, according to the report. The factory is known for the production of the iPhone 14 model. It currently employs a workforce exceeding 10,000 individuals.
The report claims that Wistron has promised Apple to ship $1.8 billion dollar worth of iPhones by March 2024. The iPhone maker had also committed to triple the workforce of the factory by next year. The report suggests that Tata Group will deliver these commitments once it finalizes the deal.
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Challenges in front of Wistron
Prior reports have suggested that Wistron made the decision to sell its iPhone assembly factory in India due to challenges in achieving profitability under Apple's terms. The company struggled to generate profits solely as an iPhone assembly provider in India, leading to its decision to concentrate on its core IT manufacturing operations in countries like Vietnam and Mexico.
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Wistron faced difficulties in negotiating higher margins with Apple, primarily due to its smaller size compared to global giants like Foxconn and Pegatron. Despite its role in assembling iPhones, Wistron encountered challenges in inventory management, which larger suppliers handled more effectively.
The lack of effective systems to gauge demand and ship products to various units further added to Wistron's struggles. The company's smaller size and management issues hindered its ability to address these challenges adequately. Additionally, cultural differences between China and India impacted Wistron's ability to retain workers, resulting in a high attrition rate at its facility in Kolar, India.
As part of its restructuring efforts, Wistron is finally selling its iPhone assembly facility in Kolar to the Tata Group. Tata is expected to improve on the current capacity of the production of iPhones in the Wistron factory. This move aligns with the company's strategy to focus on its core operations and exit the iPhone assembly business in India. It is worth noting that the Tata Group is reportedly conducting trials to assemble upcoming iPhone 15 models in India.
Wistron's entry into the Indian market initially began in 2008 with the establishment of a repair facility for various devices. In 2017, the company expanded its operations and started manufacturing iPhones for Apple.