Düsseldorf Apple has taken an important step to reduce its dependence on China as a production location: the electronics manufacturer is now also manufacturing the current iPhone generation in India, as he confirmed to several media outlets on Monday.
The contract manufacturer Foxconn, which also works for Apple in China, assembles the iPhone 14 models in a factory near the metropolis of Chennai. They are scheduled to go on sale later this year and are intended for India, which is considered the second largest smartphone market after China.
To date, the Group has mainly manufactured older generations of devices in India. However, analysts expect the importance of the site to increase. For example, the investment bank JP Morgan estimates that Apple will shift about five percent of iPhone 14 production to India this year. By 2025, the Group will have around a quarter of all products manufactured outside China.
For years, Apple has had the majority of its products – including Mac, iPad and Airpods – manufactured in China. The electronics manufacturer has recently experienced the disadvantages of this dependence several times.
When Foxconn and other contract manufacturers, for example, had to close their factories due to the strict corona regulations, this had a massive impact on production. “We are not immune to such challenges,” Chief Executive Tim Cook said in the spring.
The tensions between the US and China are also likely to have an impact on Apple’s strategy. Just a few days ago, several US senators warned the group against using the memory chips of the controversial Chinese manufacturer Yangtze Memory Technologies.
At the same time, the government in New Delhi is striving to make the country a technology hub. India offers a “better labor cost structure” and lower geopolitical risks, Jeff Pu, an analyst at Haitong International Securities, told Bloomberg.
Surprisingly fast start of production of the iPhone 14 in India
The production of the iPhone 14 in India begins surprisingly quickly for experts. So far, the production of new models there usually begins six to nine months later than in China. This is due, for example, to the fact that more time is needed to secure and deliver components. The assembly of smartphones often requires coordination between hundreds of suppliers.
Now analysts such as Ming-Chi Kuo of TF International Securities Group believe that Apple will deliver new iPhones from both countries at about the same time – a milestone in efforts to diversify the supply chain and build redundancy.
That would also be a great success for India. While the restrictive corona policy and US sanctions endanger China’s position as a factory for the world, the country wants to become attractive as an alternative.
Apple’s partners began manufacturing iPhones in India in 2017. This was the beginning of a year-long effort to build up production capacities. The country with a population of 1.4 billion is a promising market. The government of Prime Minister Narendra Modi has offered financial incentives as part of its “Make in India” program.
These are other new releases of the iPhone 14 in the overview
“All the big companies are now looking at India as part of their ‘China plus one’ or ‘China plus two’ strategy,” said Aruna Sundararajan, who served as secretary of the Indian federal government in 2017, when Apple first assembled iPhones in India. “In the long term, we need to strengthen our logistics and infrastructure, promote human capital and focus more on building an export center to make India a real alternative to China.“
Several Apple competitors have also chosen India as their production location. Samsung, for example, has built one of the largest factories in the country, and the Chinese smartphone manufacturers Xiaomi, Oppo and Vivo also manufacture there.