Info-tech

Apple eyes India to ramp up production outside China

BL Mumbai Bureau | | Updated on: May 23, 2022

FILE PHOTO: A customers holds the new green colour Apple iPhone 13 pro shortly after it went on sale inside the Apple Store on 5th Avenue in Manhattan in New York City, New York, U.S., March 18, 2022. REUTERS/Mike Segar/File Photo | Photo Credit: Mike Segar

Global tech major in talks with suppliers

Apple is potentially looking to expand its production in India, moving outside China. The global tech giant is in talks with some of its existing suppliers in the country and is possibly looking to produce for exports as well.

Currently, Apple is the second largest exporter from India for handsets after Samsung. According to Counterpoint Research, India produced 3.1 per cent of Apple’s iPhones last year, which was poised to grow to 6-7 per cent this year. Apple already has started producing its latest iPhone 13 in India with manufacturing partner Foxconn.

Apple has also recorded highest revenue in handset brands in India in 2021, touching nearly $2.09 billion against Samsung’s $2 billion.

“People who have spoken with Apple about its manufacturing plans said the company sees India as the closest thing to the next China, owing to its large population and low costs,” according to a report by Wall Street Journal.

Apple declined to comment on the queries sent by BusinessLine.

Given the clashes between Delhi and Beijing 2020 and the ongoing diplomatic tensions, this will also likely ensure that Chinese manufacturers are not able to shift to India to continue manufacturing for Apple. Chinese manufacturers though have strong presence in Vietnam.

PLI push

Moreover, the Indian government has been pushing for its production-linked incentive (PLI) scheme for boosting manufacturing in the country, which Apple could benefit from.

In Vietnam, a China-based manufacturing contractor, Luxshare Precision Industry Co., manufactures AirPods earbuds for Apple.

However, in recent calls with investors, Luxshare executives said some clients were worried about problems with power supply and pandemic restrictions – a reference to China’s challenges, WSJ’s said.

Meanwhile, Apple told its manufacturing partners that it wants them to do more new product introduction (NPI) outside of China, as per WSJ’s sources. “If that happens, the non-Chinese sites would be more likely to develop into full-scale production hubs rather than simply copying plans developed in China,” the report noted.

Apple’s reaction to reduce dependency on China could be a consequence to Beijing’s indirect support to Russia in its war with Ukraine and ongoing Covid restrictions.

Published on May 22, 2022
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