Apple might move a fifth of its iPhone production from China to India.
Currently, Apple manufactures $220 billion worth of iPhones in China.
Apple must manufacture $10 billion worth of iPhones between 2020-2025 to benefit from incentives.
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Apple may be considering moving as much as a fifth of its manufacturing capabilities out of China and straight into India. The report comes via Economic Times which reports that Senior Apple Executives have been in talks with senior Government officials to chalk out a plan for the expansion. The plan, however, has not yet been executed as there is a lot of work that remains to be done.
According to the report, Apple will be seeking to scale up its production through its contract manufacturers, Foxconn and Wistron to roughly $40 billion worth of smartphones. However, Apple would only need to produce $10 billion worth of smartphones in India in order to reap the benefits of the production-linked incentive program that is being rolled out by the Indian Government. Currently, Apple manufacturers only $0.5 billion worth of iPhones in India, while factories in China produce $220 billion worth of products.
The current government has been strongly pushing for indigenous smartphone production not just for sale within the country, but also for the purpose of export. Under the Make in India plan, practically every major smartphone manufacturer has been producing several, if not all of their smartphone portfolios in India. This has allowed the brands to take advantage of the price sensitivity within the Indian smartphone markets, keeping the sale prices as low as possible. Samsung had inaugurated the world’s largest smartphone factory in Noida in July 2018, where the production line was not only producing devices for sale in India, but also for export. The effectiveness of the Make in India plan is also the reason why the OnePlus 8 and OnePlus 8 Pro are priced significantly lower in India than in other markets.
Apple’s Make in India ambitions began with the iPhone SE and iPhone 6s being manufactured in India. Recently, the Wistron factories started to assemble the iPhone XR (Review) in India as well, which corresponded with a notable reduction in the price of the phone. However, if Apple has to scale its production to cover $10 billion worth of smartphones between 2020 and 2025, it may have to produce more than just the lower-tier iPhones within the country. Given the trend the company has followed so far, we don’t expect any of the iPhone 12 series smartphone production to be taking place in India.
The Coronavirus outbreak which started in China had brought the entire manufacturing machinery to a halt for some time. This shutdown meant that every tech company which manufactures in China will have to come to terms with delays. Rumours have pointed out that the 5G ready iPhone 12 may be delayed by a month due to this very reason. The weakness of this “Single-hub” manufacturing has never been more under the limelight and is the perfect time for companies to start diversifying when it comes to their manufacturing facilities. If Apple does come through in moving a fifth of its production to India, hopefully, we will see the more expensive iPhones also being manufactured here.
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