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Tag: India’s iPhone production

  • Apple to Boost iPhone 17 Manufacturing in India to Strengthen Local Production

    According to reports, Cupertino-based tech giant Apple intends to increase manufacturing of its iPhone 17 at all five of its Indian factories, including the two that were just added.

    According to a Bloomberg story, the business is expanding its iPhone production in India in an effort to reduce its reliance on China and diversify its manufacturing supply chain.

    All four of the iPhone 17 variants would be manufactured in India, according to the Bloomberg report, with production being expanded at Foxconn’s locations close to the Bengaluru airport as well as Tata Electronics’ facilities in Hosur and Tamil Nadu.

    Why Apple is Reducing Reliance on China?

    Apple made the decision to outsource the majority of iPhone production from China in late April of this year. Additionally, the corporation made the decision to move all iPhone assembly from the US to India by 2026. China’s hostility against the US earlier this year, when it raised its tariffs on US goods, prompted the decision.

    China reacted with a 125% tax on the US during the trade war after the US imposed 145% tariffs on China. Following this, Apple began removing China from its supply chain for iPhone manufacturing in order to safeguard itself from geopolitical unrest. Last year, Apple began producing the iPhone 15 in India, producing between 30 and 40 million handsets a year. Up until this year, Tata Electronics, Foxconn, and Pegatron, Apple’s contract manufacturers, accounted for 25% of the company’s manufacturing in India.

    Challenges in Shifting Production

    Although the company has worked relentlessly to move its manufacturing out of China, they have not had an easy time of it. When Apple decided to move its manufacturing base outside of China, it encountered challenges.

    For example, in April, Chinese officials prohibited one of Apple’s suppliers from exporting equipment to India, which was necessary for testing the iPhone 17’s trial manufacturing there. A few months later, however, Foxconn brought back 300 Chinese engineers who were thought to be crucial to the new iPhone 17’s testing in India.

    Apple’s Growth and Performance in India

    During the April-June earnings call, Apple CEO Tim Cook stated that the company has had double-digit growth in India across its sales of iPhones, Macs, and services, in addition to increasing its manufacturing in the area.

    In addition, it intends to open four new locations later this year in Bengaluru, Mumbai, Pune, and Noida in order to increase its retail presence in the area.

    The iPhone 16 family was a major factor in Apple’s 13.4% revenue increase from worldwide iPhone sales to $44.6 billion in the June quarter. In addition, the business’s total sales for the quarter increased by 10% to $94 billion.

    Quick
    Shots

    •Manufacturing across all five Indian
    plants, including new units.

    •Foxconn’s Bengaluru hub & Tata
    Electronics’ Hosur, Tamil Nadu plants to lead production.

    •Decision driven by US-China trade war
    tariffs (145% by US, 125% by China).

    •Apple reducing dependence on China to
    secure supply chain.

  • By FY27, Apple Aims to Produce 32% of iPhones and 26% of Value in India

    By 2026–2027, a year after the end of the five-year production-linked incentive (PLI) programme for handheld devices, Apple Inc. and its suppliers hope to assemble 32% of the iPhone’s global production volume and 26% of its value in India.

    If global iPhone sales stay at 2023-24 (FY24) levels, this may amount to a production value of more than $34 billion. According to media reports, the figures are based on conversations on product assembly in India between Apple Inc. and its suppliers as well as the federal and state governments. 

    India to Produce 17-18% World’s iPhone

    Apple‘s vendors project a freight-on-board (FOB) production value of $9 billion for the first half of 2024–2025 (FY25). According to projections, India would produce 17–18% of the world’s iPhones by the end of the fiscal year and 14% of their total worth.

    Only 12–14% of the world’s iPhone production volume moved to India in FY24, although the value accounted for more than 10%. The corporation is anticipated to conclude FY25 with a production value of $18 billion (market value around $27 billion), according to vendor planning.

    The Marketing Dynamics of iPhone

    Sales, distribution costs, and dealer margins make up the market value of iPhones, whereas FOB denotes the value at the time of shipment. India’s iPhone production was valued at $14 billion in FY24. Given that iPhones accounted for 51% of Apple Inc.’s $391 billion global revenue in the fiscal year that ended on September 30, 2024, the country stands to gain greatly from the move of iPhone production from China.

    With $201 billion in global sales, the iPhone is 21% more than the Tata Group‘s $165 billion overall revenue and 67% higher than Reliance Industries’ $119 billion revenue for FY24. Worldwide, Apple’s iPhone sales are on par with Microsoft’s ($211 billion) and surpass those of several companies, including Chevron ($200 billion), Honda Motor ($141 billion), Ford Motor ($176 billion), and Nestlé ($103 billion). Therefore, any increase in manufacturing capacity for India would result in significant additional income for the nation. 

    India is Becoming a Centre Stage for iPhone Production

    The significance of this change is demonstrated by the fact that JP Morgan earlier predicted that by 2026–2027, 25–30% of iPhone manufacture would relocate to India. By the fifth year of the PLI scheme, Apple had originally promised to move just 10% of its production to India. But in the scheme’s third year, it has already surpassed that amount. If US President-elect Donald Trump raises taxes on mobile devices (which are presently 15%), especially with regard to China, with whom the US is engaged in a trade war, the scenario could shift even further.

    India, Vietnam, and other Southeast Asian nations may benefit from the punitive tariffs that Trump has suggested may reach 60%. Of course, if the government does not discover more measures to reduce tariff rates on components used in mobile devices, ease labour regulations, and improve logistics, Apple’s vendor targets may alter. This is because China and Vietnam are more affordable than India. Furthermore, the difficulty of reaching value-addition goals of 35–40% by the PLI scheme’s conclusion may make matters more difficult.

    Apple Establishes First Indian R&D Subsidiary
    Apple Inc. establishes its first R&D subsidiary in India, marking a key investment in innovation and technology development within the country.
    StartupTalkyNitin Konde