BENGALURU: It’s final. Taiwan-based Apple contract manufacturer Wistron Corp on Friday approved the sale of its plant in Karnataka to Tata group. This paves the way for the salt-to-software conglomerate to become the first domestic entity to manufacture iPhones.
“The transaction price is tentatively estimated at $125 million,” Wistron said in a statement. The company’s board met on Friday to grant approval to subsidiaries, SMS InfoComm (Singapore) and Wistron Hong Kong, to sign an agreement with Tata Electronics for the sale of its 100% indirect stake in Wistron InfoComm Manufacturing (India).
The deal will need to get regulatory approval after the agreement is signed. Talks between the Wistron and Tata Group were under way for more than a year. They have not yet sought regulatory approval for the deal.
“PM @narendramodi Ji’s visionary PLI scheme has already propelled India into becoming a trusted & major hub for smartphone manufacturing and exports. Now within just two and a half years, @TataCompanies will now start making iPhones from India for domestic and global markets from India,” minister of state for electronics and IT Rajeev Chandrasekhar, said in a post on X.
The telecom ministry fully supports the 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, he said.
Wistron also said its subsidiary, SMS InfoComm (Singapore), has proposed to convert debt of $130.26 million to Wistron InfoComm Manufacturing into equity, as a part of the deal.
Wistron, which is one of Apple’s three contract manufacturers in India, currently employs more than 10,000 workers at its facility. The company has also been selected for the smartphone production-linked incentive (PLI) scheme. With the sale of the plant, the PLI benefits will also get transferred to Tata group.
Wistron is selling its unit due to difficulties in handling supplies and inventory management. Further, the company is struggling to manage its workers, who went on strikes over pay parity issues.
Globally, Wistron will continue as a contract manufacturer for iPhones, and will continue to handle repair services in India.
The Wistron factory currently assembles the iPhone 14. Its commitment to ship at least $1.8 billion worth of iPhones from the factory in the current financial year will now be taken over by Tata group.
Lately, Apple has been looking to move its manufacturing ecosystem out of China and the manufacturing partnership with Tata group will help it in this process. It will also lead to a larger relocation of Apple’s manufacturing base to India. According to industry estimates, Wistron exported nearly $500 million in iPhones from India in the April to June period.
According to industry estimates, Apple’s sales from India rose nearly 45% to $6 billion in FY23, hitting a record high. The company’s exports from India are estimated to have crossed over $5 billion.
Tata group has also been among the major beneficiaries in the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors.
Source: The Financial Express