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India’s Tata Electronics has finalized an agreement to acquire a majority stake in Pegatron’s sole iPhone manufacturing plant in India, marking a significant step in strengthening Tata’s position as a key supplier to Apple. The deal forms a new joint venture, with Tata holding a 60% stake, allowing the Indian conglomerate to take control of the daily operations at the Chennai plant. Pegatron, the Taiwanese electronics manufacturing company, will retain a 40% stake and continue to provide technical support to the operations. The specifics of the deal’s financials were not disclosed, and both Tata and Pegatron have declined to comment publicly. However, this move is seen as a strategic shift that aligns with Apple’s increasing efforts to diversify its supply chain beyond China.

The deal comes at a time when global supply chain concerns, exacerbated by geopolitical tensions between China and the United States, have made Apple increasingly reliant on manufacturing partners outside of China. This acquisition is an important part of Tata’s broader ambitions to become a central player in iPhone manufacturing within India. Tata, one of India’s largest and most diversified conglomerates, has been making substantial investments in the tech manufacturing space, positioning itself as a serious competitor to Foxconn, Apple’s other primary contract manufacturer in India.

This joint venture with Pegatron is a critical addition to Tata’s existing manufacturing footprint in India. Tata already operates an iPhone assembly plant in Karnataka, which it acquired from Taiwan’s Wistron last year. In addition, Tata is currently building another iPhone manufacturing facility in Hosur, Tamil Nadu, which includes a component plant that was involved in a fire incident earlier this year. The addition of the Chennai Pegatron plant further solidifies Tata’s role as a major player in Apple’s supply chain, with the Tata-Pegatron facility now being the third iPhone production plant in the country.

The Pegatron plant in Chennai employs approximately 10,000 workers and has the capacity to produce around 5 million iPhones annually. This plant will now be under Tata’s operational control, enhancing its manufacturing capabilities and increasing its output of Apple devices in India. The move also aligns with Apple’s broader strategy to reduce its dependence on Chinese manufacturing, with India poised to become a more significant hub for iPhone production in the coming years. Analysts predict that India will account for 20-25% of global iPhone shipments in 2024, a significant increase from the 12-14% share the country held in 2023.

The deal is also part of a larger trend in India’s growing role in the global tech manufacturing sector. With a large labor force, favorable government policies, and rising expertise in electronics manufacturing, India has become a key destination for Apple and its suppliers. For Tata, acquiring the Pegatron plant is a major milestone in its ambitions to become a leading global supplier of iPhones and other tech products.

Following the internal announcement of the deal’s closure last week, both Tata and Pegatron are expected to file for approval from India’s Competition Commission (CCI) in the coming days. This approval is seen as a procedural step before the joint venture can fully proceed with the transition of operations. As Tata further expands its iPhone manufacturing footprint in India, it is expected that the country will continue to play a growing role in Apple’s supply chain diversification strategy, which is increasingly focused on minimizing risks associated with global geopolitical uncertainties.