iPhone production: China is currently experiencing a surge in geopolitical tensions. At the same time, post Covid, many industries have shifted to neighbouring countries in the region which increased the tension for the dragon.
Apple, the world’s most valuable company, made a significant change to iPhone production process last year when it began assembling its latest iPhone models in India, instead of relying heavily on the massive Chinese factories of its main Taiwanese assemblers, such as Foxconn.
Success story of Indian iPhone manufacturing
Increase in export of iPhones from India is a positive sign for PM Narendra Modi’s goal of making India a viable alternative to China as a global manufacturing hub.
Apple Inc. exported over $2.5 billion worth of iPhones from India between April and December, which is almost double the total of the previous fiscal year. This highlights how Apple is rapidly transitioning away from China as geopolitical tensions continue to increase. Sources familiar with the matter have reported that Pegatron Corp., one of the major contract manufacturers for Apple, is expected to have moved out approximately $500 million worth of gadgets abroad by the end of January.
This year, iPhone 15 production in India is getting a head start. In the past, there was usually a delay of 6 to 9 months before new iPhones were assembled in India by Foxconn. However, this time around, production of iPhone 15 in India will commence only a week after production begins in China.
Apple’s exports numbers are increasing rapidly, showing that its strategy of expanding its business outside of China was an intelligent move. This is partly due to the disruption at Foxconn’s main factory in Zhengzhou, which has caused Apple to reduce its production forecasts in China.
India offers numerous advantages to Apple’s iPhone supply chain, including cost savings and a large potential market. The country has an abundant labour supply and wages that are at least 50% lower than in China, which makes it attractive to electronics manufacturing services providers such as Hon Hai and Pegatron. Additionally, India’s Production-Linked Incentives (PLI) program provide subsidies of 4%-6% of production costs for five years if certain performance criteria are met.
In September, Vedanta Ltd and Taiwan’s Foxconn signed an agreement with the Indian state of Gujarat, to establish a $20 billion semiconductor project. They are planning to construct a chip and display facility close to Ahmedabad, the largest city in the western state. This semiconductor unit will help the other companies to make their electronic devices rapidly in India without any supply issue from China like the past few months.
The Indian government is developing plans to provide financial incentives to manufacturers of tablets and laptops in order to attract Apple and other brands to produce their products in the country. These products range from earphones to MacBooks. Apple is anticipated to open its first retail store in India in 2023, providing that it meets the criteria imposed on foreign retailers.
If a company wishes to establish a business in a foreign country, it must ensure that the host nation has a stable government, a secure environment and favourable policies to facilitate business. India is taking all steps to provide a comfortable environment for companies to do business in the country.
To achieve its goal of reaching a 5 trillion-dollar economy, India is taking a range of measures. These include increasing the ease of doing business, promoting foreign investment, strengthening the financial sector, reducing red tape and improving access to credit.
With all these India is also taking steps to boost employment, modernise infrastructure and promote digital technology. India is investing heavily in education and health care, so as to create a skilled and healthy workforce. Finally, India under current government is focusing on improving the ease of doing trade across its borders, to facilitate further growth of the economy.
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