For some time now Apple has been wooing India’s growing smartphone users. This was evident from the manner in which the upcoming iOS14 tackled issues that mattered to Indian users. Now, it appears that Apple is all set to shift production of its iPhones to the region, which could potentially reduce iPhone costs too.
A report by Reuters claimed that Apple’s manufacturing partner Foxconn could be investing up to $1 billion to expand its existing facility in southern India. And, this could just be the first step that Apple is taking to shift production base from China to other countries.
The move, which is of a scale that hasn’t been attempted earlier, could also be a result of the ongoing trade war between Beijing and Washington, the report said. Ever since Covid-19 began in China causing Apple to shut down its manufacturing plants in Shenzhen, there have been regular reports that the company would soon be seeking newer pastures.
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Capacity expansion could bring 6000 jobs
Foxconn operates a manufacturing unit at Sriperumbudur, which is about 50 kms west of Chennai on the eastern coast of India. The report quotes unnamed sources to claim that the investment of a billon dollars would be used to expand the capacity of this unit and would be completed within a three-year time frame.
Apple had shifted the assembly of its iPhone XR model completely to this unit and the report says that several other iPhone models, currently made by Foxconn out of its Shenzhen plant in China, would be shifted to India. When contacted, an official at Foxconn India refused to confirm or deny these reports but said the company had committed to expand its base in India five years ago. “Our commitment stands and towards this end we have been in talks with states and the federal government about expansion opportunities,” the official said, on condition of anonymity.
The Reuters report said the expansion plans would bring 6,000 additional jobs at their Sriperumbudur facility. Foxconn also operates another plant in neighbouring Andhra Pradesh state where it manufactures smartphones under license from Xiaomi Corp and for some other Chinese brands.
Apple’s commitment to India
Following the bloody border skirmish between Indian and Chinese armies in Ladakh, there were reports that the federal government was delaying shipments containing smartphone components for Foxconn. However, the company clarified that iPhone production at Sriperumbudur was back to normal and that there were no delays.
Apple CEO Tim Cook had spoken about opening their first Apple Store in India by 2021. He shared this information during the Annual Shareholders meeting in February. The company had leased around 25,000 square feet at Maker Maxity mall located at BKC in Mumbai for a three-storey flagship store. Officials had confirmed then that the store would be on par with Apple’s prestigious stores in Hong Kong.
Off late, Apple has shown a renewed commitment to Indian customers by offering them customized versions of their entire range of computing devices. The configure-to-order and build-to-order options would be available for the MacBook Air (click to buy), Mac Mini, iMac and other computers.
Apple had also announced that its Apple HomePod, that was originally released in early 2018, would be sold in India. Of course, at Rs 19,000, the price factor could prove to be a dampener for customers.
iPhones could get cheaper
Currently, iPhones lead the premium market segment in India though from a sales point of view Apple only accounts for 1% of the sales in India, largely owing to higher prices caused by steep federal import duties. Once Apple shifts production to India, the cost of iPhones could drop sharply, bringing them on par with prices of other flagships.
There were reports last month of Apple negotiating with federal government to expand its base in India through the ‘Make in India’ initiative of the Narendra Modi administration. Reports had suggested that the iPhone maker was studying the feasibility of moving one-fifth of its total production out of China at an investment exceeding $40 billion over the next five years.
Given that the plant expansion is planned at the Sriperumbudur facility, Apple could also be considering India as an export hub for iPhones as transportation costs would come down drastically due to the plant’s proximity to the Chennai port.
Apple also assembles some iPhone models through its deal with another Taiwanese enterprise Wistron Corp which has a unit operating out of Bengaluru. There have been reports of Wistron investing close to $165 million towards capacity expansion.