Own or Rent – Just Get In
As we have mentioned recently, India wants to become a global powerhouse in the semiconductor space and has implemented several programs to attract fabs to the country. But the real issue for India if it is to become a haven for the electronics industry is that it is necessary to create a vibrant infrastructure of suppliers and downstream businesses to help justify the risk of developing semiconductor infrastructure outside of areas where technology infrastructure id relatively new. Tata Group (pvt), India’s largest conglomerate is trying to establish a foothold for itself in its home country that will both give it a base on which to build a larger electronics infrastructure in India, and ‘nationalize’ some of the already established downstream capacity that India needs to bring in semiconductor manufacturing.
Tata is said to be in negotiations with Wistron (3231.TT) one of the three major assemblers that work with Apple on the sub-continent (the others being Foxconn and Pegatron (4938.TT)), with the intention of purchasing Wistron’s manufacturing facility in Bengaluru for ~$612m US. The facility, the first in India to assemble iPhones, was the scene of violent protests in late 2020 when workers protested over missed wage payments as the factory rapidly hired workers. Apple suspended the facility for over two months as new managers were trained to handle the increasingly large staff of ~15,000 workers. Tata is said to also be considering a JV if Wistron does not accept its offer, as it has done in other industries, where it retains control but shares ownership with the other JV member. Tata does have a relationship with Apple as a supplier of components through subsidiary Tata Electronics (pvt), with that relationship developed through India’s “Made in India” incentive program.
Apple currently produces a number of iPhone models in India, primarily the iPhone SE, the iPhone 12, the iPhone 13, and the basic version of the iPhone 14, with the iPhone 14 higher-end models being imported, although India has moved from producing iPhone that were from past generations only a year ago, to the current generation iPhone 14, albeit the basic model only, with India’s share of iPhone production increasing from 1.3% in 2020 to 3.1% last year and 5% this year.
Such a move by Tata, sometimes referred to as the ‘Samsung of India’, as the population is always within reach of a Tata product, from birth to the grave, would help to legitimize India’s ‘in-house’ electronics manufacturing, as opposed to those facilities owned and run by Taiwanese or Chinese management, and further India’s prospects for its plans to become a global electronics powerhouse, especially given the increasing differential between average monthly wages in India versus its Chinese rivals, which is 95.5% higher in China.
Of course there is considerable trash talk over the potential deal in the Chinese trade press, extolling the virtues of the 259 Chinese Apple component supplier factories (out of 610) in China, the fact that despite a population size similar to China, India has more than 100 ethnic groups using different dialects (not sure why that is such a problem), and is a Democratic society that has ‘advanced labor protection’ , all of which make it risky to invest in India, while 90% of the Chinese population is of one ethnic group and the Chinese form of government does not allow workers to strike or compensate them for ‘protest’ time. Obviously, such talk is a bit biased and disregards a repressive Chinese governmental system that does little to offer rights to workers and indicates the increasing fear that CE companies will continue to shift production out of China. While India is still developing the necessary infrastructure to support more sophisticated electronics production, one way or the other Tata seems determined to be a local participant and the government will likely continue to be supportive.
Tata is said to be in negotiations with Wistron (3231.TT) one of the three major assemblers that work with Apple on the sub-continent (the others being Foxconn and Pegatron (4938.TT)), with the intention of purchasing Wistron’s manufacturing facility in Bengaluru for ~$612m US. The facility, the first in India to assemble iPhones, was the scene of violent protests in late 2020 when workers protested over missed wage payments as the factory rapidly hired workers. Apple suspended the facility for over two months as new managers were trained to handle the increasingly large staff of ~15,000 workers. Tata is said to also be considering a JV if Wistron does not accept its offer, as it has done in other industries, where it retains control but shares ownership with the other JV member. Tata does have a relationship with Apple as a supplier of components through subsidiary Tata Electronics (pvt), with that relationship developed through India’s “Made in India” incentive program.
Apple currently produces a number of iPhone models in India, primarily the iPhone SE, the iPhone 12, the iPhone 13, and the basic version of the iPhone 14, with the iPhone 14 higher-end models being imported, although India has moved from producing iPhone that were from past generations only a year ago, to the current generation iPhone 14, albeit the basic model only, with India’s share of iPhone production increasing from 1.3% in 2020 to 3.1% last year and 5% this year.
Such a move by Tata, sometimes referred to as the ‘Samsung of India’, as the population is always within reach of a Tata product, from birth to the grave, would help to legitimize India’s ‘in-house’ electronics manufacturing, as opposed to those facilities owned and run by Taiwanese or Chinese management, and further India’s prospects for its plans to become a global electronics powerhouse, especially given the increasing differential between average monthly wages in India versus its Chinese rivals, which is 95.5% higher in China.
Of course there is considerable trash talk over the potential deal in the Chinese trade press, extolling the virtues of the 259 Chinese Apple component supplier factories (out of 610) in China, the fact that despite a population size similar to China, India has more than 100 ethnic groups using different dialects (not sure why that is such a problem), and is a Democratic society that has ‘advanced labor protection’ , all of which make it risky to invest in India, while 90% of the Chinese population is of one ethnic group and the Chinese form of government does not allow workers to strike or compensate them for ‘protest’ time. Obviously, such talk is a bit biased and disregards a repressive Chinese governmental system that does little to offer rights to workers and indicates the increasing fear that CE companies will continue to shift production out of China. While India is still developing the necessary infrastructure to support more sophisticated electronics production, one way or the other Tata seems determined to be a local participant and the government will likely continue to be supportive.
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