Asianet NewsableAsianet Newsable

A quarter of world's iPhones to be made in India: Deciphering Apple's strategic shift in global manufacturing

As per a Wall Street Journal report, Apple, along with its suppliers, intends to manufacture over 50 million iPhones annually in India over the next two to three years, solidifying the country's role as a pivotal production center for the world's most valuable company.

A quarter of world's iPhones to be made in India: Deciphering Apple's strategic shift in global manufacturing snt
Author
First Published Dec 9, 2023, 2:31 PM IST

 

Apple Inc is making a strategic shift in its global manufacturing strategy by increasing iPhone production in India, positioning the country as a central hub in its supply chain. This move, done in collaboration with its primary supplier Foxconn, represents a substantial reconfiguration of Apple's manufacturing, traditionally concentrated in China.

As per a Wall Street Journal report, Apple, along with its suppliers, intends to manufacture over 50 million iPhones annually in India over the next two to three years, solidifying the country's role as a pivotal production center for the world's most valuable company.

This strategic move, spearheaded by Taiwan-based Foxconn, is a reflection of Apple's commitment to diversify its supply chain and reduce its reliance on China, particularly in the face of trade tensions with the US and other complexities in the world's second-largest economy.

The substantial and expanding consumer market in India presents Apple with a strategic advantage. Additionally, the country's strong trust factor and diplomatic ties with the US and its allies further contribute to the appeal of India as a key player in Apple's global production landscape.

Also read: Explained: How Aditya L-1 'SUIT'ed up to unlock secrets of the Sun

Why Apple's big bet on India matters

Apple's expansion in India has the potential to enhance its global competitiveness and market share while simultaneously creating job opportunities and fostering growth for local suppliers and contractors.

Despite the challenges associated with operating in a country characterized by poor infrastructure, restrictive labor rules, and high taxes and tariffs, Apple has steadily increased its presence in India over recent years.

In a significant development, Apple has chosen India as the location for a crucial manufacturing stage for lower-end iPhones set to be sold in 2025. This decision represents a notable shift, expanding India's role beyond its previous limitations compared to China.

A noteworthy milestone this year was the simultaneous launch of iPhones manufactured in India with the global sales debut of the latest model, marking the first instance of no delay compared to iPhones produced in China.

To meet Apple's stringent standards and tight deadlines, the company's suppliers, particularly Foxconn, have invested billions of dollars in India. These investments include the construction of new factories and the upgrading of existing ones, illustrating a commitment to aligning with Apple's production requirements.

The numbers game

A forthcoming Foxconn facility in Karnataka, slated to commence operations in April, aims to manufacture 20 million mobile handsets annually, with a primary focus on iPhones, over the next two to three years. Additionally, plans are underway for another massive iPhone production facility, with a comparable capacity to the Karnataka plant, currently in the planning stage. To contribute to the overall output, an existing Foxconn plant near Chennai and a recently acquired plant by Tata will also scale up their production capacities.

According to a Bloomberg report, Tata is reportedly in the process of constructing a factory in Hosur, Tamil Nadu. Sources familiar with the matter, opting for anonymity, have disclosed that this facility is projected to house approximately 20 assembly lines and employ around 50,000 workers within a two-year timeframe. The goal is to have the factory operational within 12 to 18 months.

This newly planned facility is expected to be of medium scale compared to global iPhone manufacturing sites. While it is anticipated to surpass the size of the facility Tata acquired from Wistron, which currently employs over 10,000 individuals, it is poised to be smaller than Foxconn's largest plants in China, where the workforce numbers in the hundreds of thousands.

The collective annual production capacity of these facilities is set to reach a minimum of 50 to 60 million iPhones within the next two to three years, with the potential for further expansion by tens of millions of units thereafter.

The big picture

Apple's shift to India aligns with a larger trend observed among companies concerned about overdependence on China, prompting them to explore alternative locations, particularly in Southeast Asia and South Asia.

The United States and its allies have been actively working to restrict Beijing's access to advanced technology while simultaneously bolstering their relationships with New Delhi. India, engaged in border disputes with China, has become a key focus in these efforts.

Apple has encountered difficulties in China this year, such as the Chinese government advising certain officials against using iPhones at work and a court ruling that banned certain older iPhone models due to patent infringement on Qualcomm's technology.

On November 27, Foxconn declared an investment exceeding $1.5 billion in India, abstaining from specifying details regarding the iPhone or particular locations.

According to Ashwini Vaishnaw, India’s information technology minister, "India’s trust factor is very high."

A source familiar with the matter told Bloomberg, "India-made iPhones were introduced on the first day of global sales of the latest model, eliminating the lag with China."

Also read: Explained: Who are Kidon, the elite assassins of Israel's Mossad?

What to watch out for

The expansion of Apple in India may encounter challenges, including regulatory ambiguity and infrastructure limitations.

Apple's suppliers are advocating for approval to implement 12-hour work shifts, particularly beneficial during peak seasons. However, labor unions have opposed this proposition, instead pressing for increased wages and benefits.

Additionally, Apple has been engaged in lobbying efforts with the Indian government to reduce taxes and tariffs on its products, aiming to address the pricing disparity compared to other markets.

Follow Us:
Download App:
  • android
  • ios