Apple has significantly increased its iPhone production in India, assembling over $7 billion worth of iPhones in the last fiscal year, which is triple the production compared to the previous year. This move comes as Apple aims to reduce its reliance on China amidst escalating tensions between Washington and Beijing. Currently, Apple manufactures almost 7% of its iPhones in India through its expanding partnerships with Foxconn Technology Group and Pegatron Corp., up from an estimated 1% in 2021.
The expansion of iPhone production in India has been driven by various factors, including the chaos at Foxconn’s main “iPhone City” complex in Zhengzhou, China, which highlighted vulnerabilities in Apple’s supply chain, as well as incentives offered by the Indian government to boost local manufacturing. In fact, Apple exported $5 billion worth of iPhones manufactured in India in the year ending March 2023, nearly four times the previous period.
Apple is also looking to further diversify its supply chain by manufacturing the next iPhones in India concurrently with China, potentially starting in the fall of 2023. With continued aggressive expansion of its supplier base, Apple could potentially assemble a quarter of all its iPhones in India by 2025.
The shift of iPhone production to India is seen as a significant economic triumph for the country, positioning it as a major manufacturing hub and an alternative location to China. This move could also have implications for other US brands as they plan their future manufacturing strategies. India represents a promising market for Apple’s future growth, especially as the Chinese economy faces challenges due to the impact of Covid-19 restrictions.
In addition to manufacturing, Apple is also focusing on expanding its retail presence in India, with plans to open its first two retail stores in Mumbai and New Delhi. The company has also sought changes in India’s labor laws to support its local production and mega factory plans. Meanwhile, Foxconn, Apple’s largest contract manufacturer, is investing approximately $700 million in a plant in a southern state of India for producing phone components and potentially iPhones.
Reducing dependence on China in the technology supply chain is expected to face significant challenges, but Apple’s move to diversify its manufacturing locations could potentially reduce its exposure to China’s dominance in the long term, according to analysis by Bloomberg Intelligence. Untangling from China’s complex supply chain would require significant investment and time, but it signals a strategic shift by Apple and other companies towards diversifying their manufacturing base.
