Apple has tripled its iPhone production in India to over $7 billion in the last fiscal year, as it seeks to diversify its supply chain and tap into the world’s fastest-growing smartphone market – according to a recent report by Bloomberg.
The company has also announced that it will launch its first retail stores in India – Apple BKC in Mumbai on April 18th and Apple Saket in Delhi on April 20th.
Apple’s Efforts to Diversify Supply Chain Lead to Increased iPhone Production in India
Apple, the world’s most valuable company, has ramped up iPhone production in India, now accounting for almost 7% of its total production, according to sources. This is a major advance for India, which made only 1% of the world’s iPhones in 2021. Apple’s move to increase production in India is part of its effort to reduce reliance on China as tensions between the US and China escalate.
Apple’s longtime partners, Foxconn Technology Group and Pegatron Corp., have added assembly lines in India at a rapid pace over the past year, as Apple explores ways to diversify its supply chain and reduce dependence on China. This move comes after Apple faced challenges in its supply chain, including disruptions at Foxconn’s main “iPhone City” complex in China in the previous year, which led to reduced output estimates.
India’s Incentives for Local Manufacturing Drive Apple’s Expansion
Indian Prime Minister Narendra Modi’s incentives to boost local manufacturing have helped drive Apple’s expansion in India. In the year ended March 2023, Apple exported $5 billion worth of iPhones from India, almost four times the previous period.
Apple is also planning to start manufacturing the next iPhones in India concurrently with China in the fall of 2023, which would be the first time iPhone assembly begins concurrently in the two countries. India could make a quarter of all iPhones by 2025 if Apple’s swift expansion continues.
Apple’s Role in India’s Ambitions to Become a Major Manufacturing Hub
Apple’s increased iPhone production in India is seen as an economic triumph for the country and could have implications for other U.S. brands’ supply chain strategies. India has been striving to become a key production center and a rival destination to China, with Apple having a crucial role in this endeavor.
Apple’s production chain, which encompasses hundreds of companies across the world and employs millions, has been heavily reliant on China, but the shift towards increased production in India could mark a significant change.
Apple Seeks Changes in India’s Labor Laws for Local Production
As part of its efforts to expand local production and create mega factories in India, Apple has sought changes in the country’s labor laws. Its largest contract manufacturer, Foxconn, plans to invest around $700 million in a plant in a southern state of India to make phone components and possibly iPhones.
Commenting on the report, Bloomberg’s Steven Tseng and Woo Jin Ho, Analysts, said:
Breaking away from China’s tech supply chain is hard but possible. We estimate a 20-40% reduction in dependence by 2030. Geopolitics and policies are driving some diversification, but it will take years of investment to match China’s capabilities and scale.