The ambitions of Tata and Vedanta in electronics are a study in contrast
Vedanta Ltd a lesson on the better path toward industrial expansion. Taipei-based Wistron is slowly exiting its business of assembling Apple’s marquee product. Two years ago, it sold a Chinese unit that makes iPhones to Luxshare Precision Industry Co.
for $457 million. On 27 October, it announced the sale of Wistron InfoComm Manufacturing (India) Pvt Ltd (WMMI) to Tata Electronics. Both sides had been in discussion for over a year, so it was expected.
Wistron’s annual report shows improving revenue and operating income at WMMI, yet a post-tax loss for the division. Although the global smartphone market is in a slump, Tata should be able to drag the business to break even within a few years. That’s the easy part.
Tata faces competition from Taiwan’s Foxconn and Pegatron, both of which are expanding in India. There’s a reason Wistron struggled to make much headway into Apple’s supply chain. Both larger rivals are more adept at a broader array of steps involved in manufacturing.
Tata, at least, has made the right start. By its own account, Tata Electronics is a “venture of the Tata group with expertise in manufacturing precision components." This is the most lucrative aspect of electronics production, and the backbone on which Foxconn started 30 years ago, with it now assembling over 70% of Apple’s iPhones. Buying a top-end factory from Wistron to move into assembly is an incremental step for Tata, not a fresh start, and augurs well for a successful future.
Contrast that to Vedanta, where billionaire chief Anil Agarwal is hoping to pivot into semiconductors. A year ago, the company had bold plans to set up a fresh chip factory in Gujarat, and had named Foxconn as a partner. The numbers didn’t make sense back then and the
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