India is the second largest smartphone market in the world after China – Apple is expanding production there.
(Photo: IMAGO/NurPhoto)
Dusseldorf Apple has taken an important step to reduce its dependence on China as a production location: the electronics manufacturer is now also producing the current iPhone generation in India, as it confirmed to several media outlets on Monday.
The contract manufacturer Foxconn, which also works for Apple in China, assembles the iPhone 14 models in a factory near the metropolis of Chennai. They are scheduled to go on sale later this year and are destined for India, which is said to be the second largest smartphone market after China.
To date, the group has primarily manufactured older device generations in India. However, analysts expect the importance of the location to increase. The investment bank JP Morgan estimates that Apple will shift around five percent of iPhone 14 production to India this year. By 2025, the group will have around a quarter of all products manufactured outside of China.
Apple has had most of its products – including Mac, iPad and Airpods – manufactured in China for years. The electronics manufacturer has felt the disadvantages of this dependency several times recently.
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When Foxconn and other contract manufacturers had to close their factories due to the strict corona regulations, production was massively affected. “We are not immune to such challenges,” said CEO Tim Cook in the spring.
The contract manufacturer is an important partner for Apple, both in China and in India.
(Photo: dpa)
Tensions between the US and China are also likely to influence Apple’s strategy. Just a few days ago, several US senators warned the company against using the memory chips from the controversial Chinese manufacturer Yangtze Memory Technologies.
At the same time, the government in New Delhi is striving to turn the country into a technology location. India offers a “better labor cost structure” and lower geopolitical risks, Jeff Pu, an analyst at Haitong International Securities, told Bloomberg.
Surprisingly quick start of iPhone 14 production in India
The production of the iPhone 14 in India is starting surprisingly quickly for experts. To date, production of new models there has generally started six to nine months later than in China. This is because, for example, more time is needed to secure and deliver components. The assembly of smartphones often requires coordination between hundreds of suppliers.
Now, analysts like TF International Securities Group’s Ming-Chi Kuo believe Apple will ship new iPhones from both countries around the same time — a milestone in efforts to diversify the supply chain and build redundancy.
That would also be a great success for India. While the restrictive corona policy and US sanctions endanger China’s position as a factory for the world, the country wants to become an attractive alternative.
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Apple’s partners began manufacturing iPhones in India in 2017. That was the start of a year-long effort to build manufacturing capacity. The country with 1.4 billion inhabitants is a promising market. Prime Minister Narendra Modi’s government has offered financial stimulus as part of its Make in India program.
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“All big companies are now looking at India as part of their ‘China plus one’ or ‘China plus two’ strategy,” said Aruna Sundararajan, who served as secretary to the federal government of India in 2017 when Apple first assembled iPhones in India. “In the long run, we need to strengthen our logistics and infrastructure, nurture human capital and focus more on building an export hub to make India a real alternative to China.”
Several Apple competitors have also chosen India as a production location. Samsung, for example, has built one of the largest factories in the country, and the Chinese smartphone manufacturers Xiaomi, Oppo and Vivo also manufacture there.
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