Apple to make over 50 million iPhones a year in India – Technology News

December 9, 2023

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Apple is looking to make over 50 million iPhones in India annually within the next two to three years, according to a report by The Wall Street Journal. Once the company achieves this, India would account for 25% of global iPhone production.

The company tends to achieve this by creating an ecosystem of its suppliers in India and also looks to produce additional tens of millions of iPhone units after achieving the 50 million mark, the report said, citing sources.

Despite this, China, however, will continue to remain the largest iPhone producer, accounting for over half of iPhone output.

Lately, Apple has boosted its reliance on India in recent years despite challenges including complex infrastructure and restrictive labor rules that often make doing business in India, harder than in China.

Among other issues, labor unions retain clout even in business-friendly states and are pushing back on an effort by companies to get permission for 12-hour work days, which Apple suppliers find helpful during crunch periods, the report said.

Among Apple’s lead suppliers, Taiwan-based Foxconn, believes the initial push into India has gone well and this is laying the groundwork for a bigger expansion, the report said, citing sources.

Apple is emblematic of a move among companies worried about overdependence on China to move parts of their supply chains elsewhere, most often to Southeast Asia and South Asia. Diplomatic efforts by the US and its allies to block Beijing’s access to advanced technology and strengthen ties with New Delhi have accelerated the trend.

The first phase of a Foxconn plant under construction in the southern state of Karnataka is expected to start operating in April next year, and the plant aims to make 20 million mobile handsets annually, mainly iPhones, within the next two to three years, according to the report, citing people with direct knowledge of the construction plans.

A mega plant is on Foxconn’s drawing board with capacity similar to the one in Karnataka, although the plans are still in a
nascent stage, the people said.

Apple also has chosen India as its site for a manufacturing stage for lower-end iPhones to be sold in 2025. In this stage, known as new product introduction, Apple’s teams work with contractors in translating product blueprints and prototypes into a detailed manufacturing plan. Until now, that work was done only in China, The Wall Street Journal said.

According to the report, combined with plans for expanded production at an existing Foxconn plant near Chennai and at another existing plant recently bought by Indian conglomerate Tata, these developments signify that Apple intends to have the capacity to make at least 50 million to 60 million iPhones in India annually within two to three years.

Lately, Foxconn indicated its commitment to India by announcing that it was investing the equivalent of more than $1.5 billion in the country.

Global iPhone shipments last year totaled more than 220 million, according to research firm Counterpoint, a number that has remained steady in recent years.

“India’s trust factor is very high,” the report quoted Ashwini Vaishnaw, communications and IT minister.

This year, for the first time, India-made iPhones were introduced on the first day of global sales of the latest model, eliminating the lag with China-made phones.

Supply-chain executives say hourly wages are now significantly lower in India than in China, but other costs such a transportation remain higher, and labor unions sometimes resist rule changes sought by manufacturers, The Wall Street Journal said.

In May, the chief minister of Tamil Nadu state, where Foxconn’s flagship Chennai plant is located, said he would withdraw regulations allowing a 12-hour workday, weeks after the state passed an amendment authorizing the longer hours. The chief minister, MK Stalin attributed the decision to opposition from labor activists.

Karnataka has stood by a decision earlier this year to extend the workday to 12 hours, up from a previous limit of nine hours, though companies must seek approval to do so.

After years of battling local content rules and other red tape, Apple this year opened its first retail stores in India. The report , quoted Abhilash Kumar, an India-based analyst at TechInsights, as saying that the top-of-the-line iPhone 15 Pro Max was selling well in the country, though it costs about $700 more than in the US.

Apple also is making progress in India toward building a network of core suppliers, long a strength of Chinese manufacturing. Officials said this week that Japanese battery maker TDK would build a new factory in India’s Haryana state to manufacture battery cells to power Indian-made iPhones.

The moves don’t mean Apple and its suppliers are leaving China. Apple Chief Executive Tim Cook has traveled to China twice this year, stressing the country’s importance. He visited Luxshare, a China based assembler that is taking a bigger role in the China portion of iPhone assembly, the report said.

On social media, Apple has assured Chinese consumers that iPhones selling in authorised channels are made in China.

Foxconn Chairman Young Liu said in November that China would continue to account for the largest share of Foxconn’s capital investment next year. Liu has visited India at least three times in the past year and a half, meeting Prime Minister Narendra Modi and other officials.

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