Apple Inc. has significantly increased its iPhone production in India. It reached over $7 billion in the last fiscal year, three times more than the previous year. The company has made this possible by expanding its production partners beyond China, with Foxconn Technology Group and Pegatron Corp among the companies involved. As a result, nearly 7% of iPhones produced by Apple are now manufactured in India. This marks a substantial increase in the country’s contribution to the world’s iPhones, given that it was only responsible for approximately 1% of production in 2021.
Reducing Reliance on China
Apple is facing the challenge of reducing its dependence on China. This is due to the growing tension between the United States and China. Its longstanding manufacturing partners, responsible for producing most of the world’s iPhones in China, have significantly increased their production capacity over the past year by adding more assembly lines. The company wants to diversify its supply chain. Therefore, it is exploring opportunities to ramp up local production in India. Thus, it is seeking incentives from the Indian government to support this initiative. The move towards local production in India would also help mitigate the risk of supply chain disruptions. This includes the chaos experienced at Foxconn’s main “iPhone City” complex in Zhengzhou last year.
Exports and Future Plans
According to recent reports, Apple has exported iPhones worth $5 billion in the fiscal year ending March 2023. This represents an almost four-fold increase from the amount it had exported in the previous year. The company plans to manufacture its next iPhones in India and China to reduce its reliance on China. Thus, marking the first time that assembly would begin in both countries simultaneously. Experts estimate that if the company continues to expand its suppliers at this pace, its assembly lines in India could account for around 25% of the total iPhones produced by 2025.
Apple in India
Apple aligns its expansion in India with the country’s goal to emerge as a significant manufacturing hub. Also, as an alternative destination to China. It is a demanding manufacturer, and its production chain involves numerous companies worldwide, employing millions, most of whom are based in China.
Furthermore, the entry of Apple in India is a significant economic achievement. This may impact the plans of other US brands. India presents an opportunity for the company’s future growth. The Chinese economy has been under strain due to several years of COVID-19 restrictions.
Additionally, Apple will open its first retail stores in India next week, one in Mumbai and another in New Delhi. Tim Cook, the CEO of Apple, plans to personally inaugurate the stores by flying in. This underscores the increasing significance of the domestic market.
Labour Laws and Investment
As Apple seeks to expand local production and establish mega factories in India, the company has also requested changes to the country’s labour laws. Foxconn, its largest contract manufacturer, is expected to invest $700 million in a southern state to manufacture phone components and potentially iPhones. However, Foxconn, Wistron Corp., and Pegatron representatives have yet to comment.
According to Bloomberg Intelligence’s analysis, Apple’s efforts to decrease its reliance on China present significant challenges. Although India is a viable alternative for manufacturing, the country still lacks the infrastructure, skilled workforce, and technology capabilities that China has developed over time. Additionally, India’s bureaucracy and legal system can make it difficult for foreign companies to establish local operations. Thus, further complicating the process.
Bloomberg Intelligence reports that reducing reliance on China’s dominant technology supply chain, established over decades, will be challenging. However, according to their study, dependency might be decreased by 20–40% in most situations by 2030. While political tensions and government and company policies are prompting initial moves to diversify geographically, it will take years of investment to significantly separate from China’s complex, efficient, and skilled supply chain, which encompasses semiconductors, hardware, and assembly.
