Tata Electronics is looking to scale up its manufacturing scope beyond iPhone casings, targeting more advanced components such as glass-based enclosures and specialised metal parts, people aware of the developments told ET. The company is seeking to climb the value chain and garner a larger piece of the Apple pie in India, an industry source said. This becomes significant as Tata Electronics is the fourth-largest Tata Group company by revenue and has emerged as a top-tier Apple supplier in the country.
“The company has scaled effectively for iPhone casings and is now looking to deepen its presence in the category,” said one of the people cited above. “It is assessing a foray into glass-based enclosures and a clutch of other metal parts and components that make up the category.”
Queries sent to Tata Electronics and Apple remained unanswered until the publication of this report. Analysts said this strategic diversification coincides with Apple’s India push. The country now reportedly assembles a quarter of worldwide iPhones and clocked a record $13.2 billion in iPhone exports in the first five months of this fiscal year.
Enclosures consist of the metal frames or casings on which all other components are mounted, making them a key source of value addition in the supply chain. It is also a category that has received significant backing from the government through the electronics components manufacturing scheme (ECMS).
Tata Electronics was among the players that received approval under the ECMS for the enclosure category. In fact, the bulk of the approved amount — Rs 27,166 crore — was earmarked for three projects dedicated to mobile enclosure manufacturing by Tata Electronics, Motherson Group and Taiwanese major Foxconn’s India arm Yuzhan Technology.
Value chain
Tata Electronics’ proposed expansion into the broader enclosures category is being seen as a natural progression as it looks to broaden its expertise as an Apple supplier.
Neil Shah, co-founder and vice president - research at Counterpoint Research, explained the strategic importance of the enclosure. He said that in advanced electronics manufacturing such as premium smartphones from Apple or Samsung, an ‘enclosure’ is far more than a protective outer shell and is an intricately engineered multi-tier design to give form, function and fashionability.
“Understanding the enclosure means recognising that precision mechanical engineering is just as foundational to a smartphone’s performance as its silicon,” he said. “Tata Electronics looking to move into this complex CNC machining, structural metal parts, and glass integration is a natural leap up the value curve.”
Shah said that final assembly historically captures low single-digit margins, whereas precision mechanicals demand proprietary tooling, high capex, and superior yields that unlock much higher margin realization.
“This is where players such as Foxconn, Luxshare, Huaqin, BYD and others have done pretty well,” he explained. “Assembling the outer chassis locally is what could transform India’s indigenous capability to become an advanced electronics manufacturing and assembly powerhouse with Tata at the forefront of the local EMS cohort.”
‘Formidable' partner
Further, with their component PLI backing, Shah said this vertical integration anchors the company as a formidable partner for Apple’s unanimous levelling diversification strategy.
Counterpoint’s Shah emphasised that Apple’s local partners in India have to move up the chain in investments, capability and experience curve to reach the level of craftsmanship Apple and their users expect, and enclosures are a great place to double down.
Prabhu Ram, vice president, industry research group, Cyber Media Research, too, backed the view that a move into glass-based enclosures and a wider range of metal components would build on Tata Electronics’ growing manufacturing maturity and recent growth momentum.
“Hosur already provides Tata Electronics with a base in precision machining, tooling and surface finishing for metal casings,” he said. “Expanding into adjacent components and materials could build on these capabilities, enabling the company to capture a greater share of component value and broaden its precision-manufacturing portfolio.”
He added that this would also signal a move up the value chain.
“If successful, the expansion could strengthen Tata Electronics’ position in the electronics manufacturing ecosystem, creating opportunities for deeper customer integration, greater engineering involvement and participation in more complex manufacturing programmes. It would also align with Apple’s broader push to deepen component manufacturing and value addition in India as it diversifies its global supply chain,” Ram said.