Important points
Tata Electronics has acquired the Indian arm of Chinese industrial company Justec Precision for nearly $100 million, according to two people familiar with the matter. The Tata Group subsidiary is said to be increasing its manufacturing capacity to benefit from Apple’s focus on iPhone manufacturing in India. The deal was completed in August with HSBC Bank and HDFC Bank advising on the transaction, the people said. Justech Precision, headquartered in Kunshan, Jiangsu Province, China, has been an Apple supplier since 2008. The company supplies Foxconn, the world’s largest assembler of Apple products, with industrial equipment such as computer numerically controlled machines used in precision cutting and manufacturing operations. Justec Precision Industry India, which was founded in late 2019 and is based in the southern Indian state of Tamil Nadu, did not respond to CNBC’s request for comment, nor did Tata Group. Tata Electronics declined to comment. In January, Tata Electronics reportedly acquired a 60% stake in the Indian operations of Taiwanese contract manufacturing company Pegatron, which operates an iPhone factory, Reuters reported. The transaction amount was not disclosed. The acquisition comes as Tata Electronics, which started assembling iPhones in India in 2023, aims to expand its manufacturing capacity, and Apple reportedly plans to source all iPhones for the U.S. market from India by the end of 2026. Apple still makes most of its smartphones in China, but has taken emergency steps to increase production capacity in India with contract manufacturers Tata Electronics and Foxconn as it seeks to exit the country amid rising tariffs. and geopolitical tensions. Neil Shah, co-founder and vice president of market research firm Counterpoint Research, said Foxconn still accounts for two-thirds of total iPhone shipments in India, with Tata accounting for the remaining third, and he expects that market share could change quickly if Tata ramps up manufacturing. Tata currently operates two factories in the southern Indian state of Tamil Nadu and one factory previously owned by Wistron in the neighboring state of Karnataka. Manufactured in India by 2026 Apple began looking for alternative manufacturing locations after the outbreak of the pandemic and subsequent lockdown in China disrupted production at its largest assembly plant. Apple is accelerating its production shift in the wake of rising tensions between China and Washington and this year’s hike in tariffs on Chinese imports to the United States. US President Donald Trump initially imposed exorbitant triple-digit tariffs on Chinese imports before temporarily suspending smartphone shipments. India also faces high tariffs from the United States, but iPhones made in India are currently exempt from tariffs. President Trump was furious after Apple moved production to India instead of the United States, and in May he threatened to impose a 25% tariff on iPhones. Prime Minister Narendra Modi has sought to promote India as a smartphone manufacturing hub in recent years, and hopes to embrace Apple and use it as a symbol to attract other tech companies to India for manufacturing and development. But Apple has also faced challenges in its early manufacturing experiments in the country, particularly at its Wistron factory in Bangalore, where older iPhone models are assembled, where labor riots occurred in late 2020. Rather than bringing Chinese and Taiwanese partners to India and relying on them, Apple is looking to build “highly localized” partners to achieve “true diversification,” but Shah said it could take time to find replacements for parts sourced primarily from Chinese suppliers. year. “Building a similar supplier ecosystem like the one we enjoyed in China will not be a sprint, but a marathon and gradual process,” Shah added. By the end of 2025, India will account for about 26% of global iPhone shipments, up from 20% at the beginning of the year, according to the latest estimates from Counterpoint. During a visit to China in March, Apple Chief Operating Officer Jeff Williams visited Justec’s innovation exhibition center in Jiangsu province and pledged to continue making major investments in the country.
