Tata chairman's shock exit move puts JLR owner's bets on chips, iPhones and Air India at risk

The future of India's first semiconductor plant and the country's ambition to replace China as a major supplier to Apple face growing uncertainty after Tata Sons Chairman N. Chandrasekaran said he would no longer seek another term. Tata Group has made some of the "largest capital commitments" under Chandrasekaran's leadership, which in the latest letter to shareholders he described as the building blocks for India's road to becoming a developed country by 2047. Tata Sons, the holding company of Tata Group, also acquired beleaguered national carrier Air India in 2022, started iPhone production after buying Wistron and Pegatron, reportedly overtaking Taiwanese company Foxconn's India unit to become the country's largest Apple supplier. In 2024, it unveiled plans to set up India's first semiconductor plant worth $11 billion in partnership with Taiwan's Powerchip Semiconductor Manufacturing Corp. All these initiatives by the slat-to-steel conglomerate that also owns luxury automaker JLR are in the early investment cycles and are not churning profits. The decision to take bold bets, risking losses at a time when the group's top money-spinning company, Tata Consultancy Services, grapples with the impact of artificial intelligence on the information technology sector has led to a rift between Tata Sons and its key shareholder, Tata Trusts, experts said. The current "struggle" between Tata Trusts and Tata Sons arises from capital allocation to loss-making businesses, Ruchir Khare, chief investment officer at portfolio management firm Two X Capital, told CNBC, adding that the chairman's impending departure raises questions over the group's commitment to making large, long-term investments. Chandrasekaran is seen as the "professional successor" to the late Ratan Tata, who had appointed him, said Khare, adding that the lack of continuity implies there is a difference of opinion among the two power centers on the future direction of Tata Sons. On Thursday, a day after Chandrasekaran gave up on another term as chairman, expressing displeasure at the delay in finalizing his reappointment for another five years, the process has formally begun to look for the 63-year-old's replacement. Sir Dorabji Tata Trust, part of the key trusts that together hold a 66% stake in Tata Sons, said in a statement that it "respects Mr. Chandrasekaran's decision not to offer himself for re-appointment" and extends "full support to Tata Sons in ensuring a smooth, timely and orderly transition of leadership." Chandrasekaran, in his resignation letter on Wednesday, said the proposal to extend his term had been pending for six months and "was not carried through because one of the Board Members did not support it." As per local media reports, he had disagreements with Noel Tata, the chairman of Tata Trust, over the weakening profitability and capital allocation to loss-making businesses. During the financial year ended March 2026, Tata Sons' consolidated net profit slipped 35% to 266 billion rupees (about $2.78 billion) as losses from Air India, Tata Digital and Tata Electronics piled up, as per Tata Sons' latest annual re...