While Foxconn is mounting iPhone in China too Apple, the contract manufacturer, is also putting together some models in India. This is done to avoid import duties being levied on units imported to India from China. While India is the second largest smartphone market in the world, it is a developing country and per capita income is low. That’s why Xiaomi manages value for money so well in the region. It also explains why Apple produces older, cheaper iPhones in the country. Not only are the older models cheaper, but producing them in the country saves consumers from having to pay the import tax. The iPhone has a 1% share of the smartphone market in India where they are considered a status symbol.
Apple wants to move 20% of iPhone production from China
Citing a couple of sources, Reuters said last week that Foxconn plans to invest as much as $ 1 billion to expand a plant in southern India where iPhone devices are manufactured. In addition to expanding production to avoid import taxes and to align with Prime Minister Narendra Modi’s Make in India initiative, Apple is also seeking to slowly move iPhone production from China due to the country-US trade war. The US-China relationship is moving and there is no stability; At any time, the Trump administration may decide to impose tariffs on products imported from China.
The iPhone XR is one of the models currently being built in India
Back in May, a rumor published in India said that Apple is working with the Indian government to move up to 20% of the current iPhone production to India from China. As a result, up to $ 40 billion in iPhone production would remove Indian assembly lines. The big question is whether Apple can put together a supply chain to cover the amount and quality of parts it would need to build so many phones in the country. Therefore, the question of the supply chain is that many people believe that Vietnam could eventually replace China in iPhone manufacturing.
One of the two sources cited by the wire service with direct knowledge of the situation said: “There is a strong demand from Apple for its customers to move part of the iPhone production from China.” The second source says that further investments in the Sriperumbur plant, located just over 31 km west of Chennai, will be made over a three-year period. This factory is currently producing 2018 iPhone XR. The plan is for Foxconn to add other iPhone models to be installed at the facility. Both sources chose to remain anonymous as the talks are secret and the final details have not yet been agreed. 6,000 additional workers will work at the factory according to plan. Foxconn also has a plant in the southern Indian state of Andhra Pradesh where it manufactures phones for Xiaomi.
Another contract manufacturer Apple is working on, Wistron, has a facility in the southern Bengaluru tech center. Taiwan assembler is building a new factory where more Apple products are expected to be manufactured. India is also trying to get Chinese smartphone manufacturers to build mobile phones in the country through a production-linked incentive program (PLI). Samsung has already planned to use a factory near New Delhi to produce phones for export.
Last month, Apple talked about its supply chain shipping to India components needed to mount iPhone SE (2020). Eventually, Apple could turn India into a hub for export. Everything depends on the supply chain, according to Neil Shah from research firm Counterpoint. He says: “With India’s workforce cheaper compared to China and the gradual expansion of its supplier base here, Apple will be able to use the country as an export hub.