Apple is intensifying its investment in Indian production capabilities. Sources close to the matter revealed that Apple aims to manufacture over 50 million iPhones annually in India within the next two to three years, with plans to further increase production by tens of millions.
Media reports suggest that if this plan materializes, India will account for a quarter of the global iPhone production and is expected to hold an even larger share by the end of the century.
Apple's production increase goal has been met with a positive response from its largest product supplier, Foxconn. Last Monday, Foxconn announced an investment of over $1.5 billion in India for a construction project. Insiders stated that this investment includes manufacturing products for Apple.
Foxconn is set to open a new factory in Karnataka, considered India's tech hub, by April next year. The plan is to produce 20 million smartphones annually within two to three years, most of which will be iPhones, as revealed by officials directly involved in the planning. Along with other projects, Foxconn's investment in the city could reach approximately $2.7 billion.
The launch of the iPhone 15 in India marks a significant milestone in Apple's manufacturing plans, as it will be the first time the latest iPhone model is shipped globally simultaneously from factories in India and China.
In recent years, Apple has been trying to shift parts of its supply chain to Southeast Asia and South Asia due to challenges like unstable infrastructure, restrictive labor rules, and strong union influence in production. This has led to an increased reliance on the Indian supply chain.
Sources in the supply chain mentioned that Apple and suppliers like Foxconn generally view the initial progress in India as smooth, laying the groundwork for more significant expansion.
In addition to expanding production, Apple also plans to make India the production base for lower-end iPhones by 2025. This means Apple's team will work with Indian contractors to transform product blueprints and prototypes into detailed manufacturing plans.
With the expansion plans of the existing Foxconn factory near Chennai and another factory recently acquired by the Indian conglomerate Tata, India's total production capacity could reach 50 to 60 million iPhones annually within two years.
Supply chain executives pointed out that India's hourly wages are significantly lower than in other countries. However, transportation and other costs remain high, and unions sometimes resist changes sought by manufacturers, such as extending working hours to 12 hours.
India's domestic market also holds great potential. Apple opened its first retail store in India this year, and despite the top-tier iPhone 15 Pro Max being priced $700 higher than in the U.S., sales in India have been "good," according to TechInsights' India-based analyst Abhilash Kumar.
FILE PHOTO: The Foxconn company logo is seen at the facility in the Racine County town of Mt. Pleasant, Wisconsin, U.S., April 28, 2019.
Key suppliers like Tata, Foxconn, and TDK are joining the expansion. Establishing a core supplier network is crucial for shifting the supply chain.
Apple has already made progress in this area in India. Besides its largest supplier Foxconn, Japanese battery manufacturer TDK is also reportedly building a new factory in Haryana. In October, the Indian conglomerate Tata agreed to acquire a factory from Taiwan's Wistron, becoming the first Indian company to manufacture iPhones. Additionally, Tata is reportedly planning to open 100 Apple-exclusive stores across India in collaboration with Apple.
Rajeev Chandrasekhar, India's junior minister for information technology, stated that Apple has added an additional spoke to its India strategy, with the country's largest business group, Tata Group, also becoming part of its manufacturing system.
However, a strong push into India does not mean Apple suppliers will exit China. According to data from research firm Counterpoint, China continued to account for over half of iPhone production last year, remaining Apple's largest supplier.
Media data shows that nearly half of Apple's 190 suppliers are Chinese companies, with nearly 160 of them manufacturing components within China.
Foxconn Chairman Liu Yangwei stated last November that China would continue to hold the largest share of Foxconn's capital investment next year.
