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Apple to relocate at least 20% of iPhone production to India

Apple is urging its suppliers in India, responsible for the new iPhone 15 series, to manufacture over 15 million iPhones in 2023, a significant increase from the previous year. The tech giant aims to simultaneously produce iPhones in both India and China, aiming to reduce the production time gap between the two countries. This strategy aims to diversify Apple’s supply chain and reduce its dependence on China, driven by political and commercial considerations.



INDIA: Apple is targeting to relocate at least 20% of its iPhone manufacturing from China to India as part of its strategy to reduce supply chain dependency on China for its iPhone production

Apple’s suppliers in India, which makes the new iPhone 15 series, are being asked to make over 15 million iPhones in India this year, more than double the goal a year ago, according to Nikkei Asia.

The tech giant tries to produce iPhones simultaneously in India and China.

It once took one year longer to produce a new iPhone in India than in China, but the gap was reduced to around a month in 2022. The target this year is to narrow that to less than ten days.

China has long served as the reliable supplier for Apple’s efficient production processes.

More than 80% of Apple’s key 188 suppliers maintain manufacturing facilities in China, establishing the country as a crucial hub for the company’s operations.

Meanwhile, China has accounted for more than 95% of global iPhone production since the mobile phone was launched in 2007.

However, the era of exclusive dependence on China is ending, both for political and commercial reasons.


Earlier in 2023, Apple reportedly told suppliers to prepare to build at least 20% of total iPhone annual production in India in the coming years. The proportion currently stands at less than 10%.

Apple wants to broaden and deepen production in India, where it is currently weighted more toward routine tasks like assembly. Rather than snapping together already finished components in India, Apple plans to make more intermediate parts, such as metal casings, in the country.

Most important of all, Apple wants to bring crucial new iPhone product development resources to India from China. That involves thousands of engineers and the establishment of numerous new laboratories.

The longtime Apple formula of “designed in California, assembled in China” has faced unprecedented challenges with the twin crises of the COVID-19 pandemic and ongoing tensions between the U.S. and China. U.S.-China technology sector “decoupling” has seen U.S. sanctions against Chinese companies enforced since 2018. The resultant uncertainty has pressured the tech industry, including Apple, to diversify its manufacturing base to other countries.

Apple’s shift to India parallels U.S. diplomatic overtures to New Delhi, in which technology plays a key role. For example, when U.S. President Joe Biden met Indian Prime Minister Narendra Modi on June 22, they jointly announced building “an even stronger, diverse U.S.-India partnership.” A memorandum of understanding on semiconductor supply chain collaboration and critical mineral supply chains was also signed.

Politics are key to the current shifts

“We know that US-China relations are not that great and India-China relations are also not that great.

“Apple is hedging its geopolitical risks [by] creating parallel manufacturing units in other countries, including Vietnam and India,” said Prachir Singh, an India-based analyst with Counterpoint, a global market research company.

But Apple has its own reasons for seeking to reduce its dependence on Chinese supply chains. A top concern is unrest at Apple’s production hub of Zhengzhou in October, the result of a Covid-19 outbreak, according to Nikkei Asia.

Another factor favouring manufacturing investment in India is the crowding out of alternative destinations like Vietnam and Thailand, usually the first beachheads for tech manufacturers seeking to move production out of China.

In these countries, the costs of land, water and electricity have been rising recently, and supply chain companies must think twice about investing. India, with its huge population, relatively low wages, large land mass and good English skills, is an obvious alternative to consider.

Then there is India’s massive market. Deloitte, a financial consultancy, projects that India will have 1 billion smartphone users by 2026, making it the largest market after China.

India’s government sees access to this market as leverage to entice Apple to make more locally, improving the reputation of India’s manufacturing sector with the coveted “Apple supplier” accolade.

“India’s attractiveness includes its massive market, cheap labor and government incentives,” said Counterpoint’s Singh. “We recognise we will see a significant shift over here.”

But Apple’s India move is taking place against the backdrop of a complicated bargaining process, and New Delhi is taking steps to ensure Indian companies get lucrative roles in the process.

“India stands to benefit greatly from the US and other countries’ interests in de-risking from China, and shifting supply chains to other places,” said Lisa Curtis, director of the Indo-Pacific security programme at the Center for a New American Security (CNAS) and a former US official.

Several people close to Apple’s decision-makers reportedly said the catalyst for its move toward India was the unrest in Zhengzhou, home to the company’s largest iPhone assembly hub and its most important single production site in the world.

In October, a Covid-19 outbreak at Foxconn plants there, and the quarantine measures that followed, sparked protests among workers.

Production was disrupted for more than a month at the most critical time of the year, the shopping season leading up to Christmas.

Protesters smashed windows, turned over police cars, and clashed with quarantine personnel in hazmat suits. Police in riot gear had to be called in to quell the disturbance.

The Zhengzhou incident made clear to Apple executives that the docile workforce and efficient plants they have counted on for two decades can no longer be guaranteed. Apple decided it would need to move more of the iPhone supply chain out of China, just as India was coming into view as the alternative.

In light of the supply chain turmoil, Foxconn reportedly quickly gathered a task force of roughly a dozen employees and sent them to India.

Apple also sent experienced staff who oversee device production. Both groups arrived in India last autumn in an effort to jump-start production there.

By January, progress in India had already exceeded expectations.

Apple CEO Tim Cook opened doors of the very first Apple physical retail store in Mumbai, India Mumbai, located at the Jio World Drive mall in the Bandra Kurla Complex (BKC)

In April, Tim Cook travelled to India to open Apple’s first two retail stores in Mumbai and Delhi in the same week. Cook’s presence showed that in addition to diversifying supply chains, Apple also wants better access to India’s immense market.

Moving manufacturing to India has also been a strategy adopted by China’s Xiaomi, Oppo, and Vivo in their efforts to lower costs and bypass the tariffs India applies to imported phones.

That was all part of the Make in India campaign introduced in 2014 by Modi to encourage more local manufacturing.

Apple reckons that by pursuing the same strategy, it will have better access to the market there, more goodwill from the government, and ultimately reduce its reliance on China.

While Samsung is now India’s smartphone market leader, Apple is poised to take a slice out of that. Runar Bjorhovde, an analyst at Canalys, said Apple ranks seventh in India by shipments, already a significant volume given the iPhone’s price is much higher than most of its peers.

“With the economy improving in India, and with more tech investment going into India, we will probably see a similar socioeconomic change there as we’ve seen in China over the last two to two and half decades.

“That could give these smartphone makers great growth catalysts if they have access to the market just like what they did in China in the past,” Bjorhovde said.

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Move Aside, iPhone.
Here Comes Qphone.

The standard of Iphones going to drop.

Let’s hope Apple doesn’t suffer a Boeing 737 Max type incident with their India manufactured iPhones.