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Business News/ News / Apple aims to produce 25% of all its iPhones in India by 2028
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Apple aims to produce 25% of all its iPhones in India by 2028

The Cupertino-headquartered tech giant has already begun work on building the local supply chains even as a majority of its production will be undertaken by Foxconn Technology Group and Tata Electronics that will scale up their manufacturing capacities as well.

The iPhone maker’s India revenue is expected to rise 20% in FY25, after having grown by about 70% in FY24 to reach an estimated $10 billion. (REUTERS)Premium
The iPhone maker’s India revenue is expected to rise 20% in FY25, after having grown by about 70% in FY24 to reach an estimated $10 billion. (REUTERS)

New Delhi: Apple aims to broaden its production base in India, and targets to make a quarter of all its iPhones in the country over the next 3–4 years as it builds a network of local vendors instead of sourcing inputs from Chinese suppliers.

People aware of the company’s plans told Mint that the Cupertino-headquartered tech giant has already begun work on building the supply chains even as a majority of its production will be undertaken by Foxconn Technology Group and Tata Electronics that will scale up their manufacturing capacities as well.

Important market

“India is an important market for them. Till December 2023, they are already doing 14% of their total iPhone production from India that is being supplied locally and for exports. They're now planning to raise the levels to 24-25% by the end of 2027 or 2028," one of the people said, asking not to be named as the discussions were private.

Also read |  India could be Apple’s third largest market in 3 years

JP Morgan analysts had estimated in 2022 that a quarter of all Apple products would be made outside China by 2025, from 5% at that time. As of FY24-end, about $14 billion worth of iPhones were made in India, making up 14% of the global total. India produces iPhone models 12, 13, 14, and 15.

Taiwan's Foxconn Technology Group, the world’s largest contract manufacturer and the largest one for Apple, accounts for the lion’s share of iPhones made in India. Last year in October, Tata Electronics acquired Taiwanese iPhone maker Wistron’s manufacturing unit in India, Wistron InfoComm Manufacturing (India) Private Limited, for $125 million. Tata Electronics currently makes a far smaller number of iPhones, but intends to scale its manufacturing capacities. It is also in discussions to acquire Indian operations of another iPhone maker Pegatron. The Taiwanese company has one existing iPhone production plant and another under construction, in Tamil Nadu.

Also read |  Apple, Samsung boost India’s mobile phones exports to 1.2 trillion

A second person aware of the discussions said that the acquisition may be completed within the next few months, which will give the Tata Group company significant foothold in the Apple supplier ecosystem. “It will make Tata the only Indian EMS (electronics manufacturing and services) player for Apple. With Tatas making their own chip fabrication and assembly units, supplies of chips to Apple can also be explored," the person said, asking not to be identified.

Quarter of production

“Apple makes roughly 200 million iPhones a year. A quarter or 50 million iPhones from India within three to four years seems steep, since the premiumization trend would not stay for long. Even if it is 30 million units, it would be substantial, and it is the most likely candidate to cross 1 trillion revenue from India operations," said Faisal Kawoosa, chief analyst and founder at research firm Techarc.

Emails to Apple, Foxconn and Tata Electronics did not elicit a response till press time.

Also read |  Weekly Tech Recap: Apple launches 2 new iPads, Google quietly introduces Pixel 8a and more

Analysts tracking Apple and the India market said that building a local ecosystem would be crucial for raising the production levels. Apple has been expanding its base of suppliers in India, which now includes Flex Ltd, Jabil Inc, Cheng Uei Precision Industry Company Limited (Foxlink), Interplex Holdings Pte. Ltd, Lingyi iTech (Guangdong) Company, ON Semiconductor Corporation, Shenzhen YUTO Packaging Technology Company Limited, TDK Corp, Zhen Ding Technology Holding Limited, besides Tata Electronics and Foxconn.

A third person privy to the plans added that 40-100 suppliers would form part of the supply chains that Apple intends to create within India over the years. “While they have about 400 odd suppliers globally, not all would be able to come to India. They want to create local suppliers that can scale up and form an alternative supply system to China," the person said, asking not to be named.

Also read |  Indian govt issues high risk warning for Google Chrome and Apple iTunes. Here's what you must do

Mint had reported recently that India could be Apple’s third-largest market by sales, after China and the US, in three years. The iPhone maker’s India revenue is expected to rise 20% in FY25, after having grown by about 70% in FY24 to reach an estimated $10 billion, and having reported “a record March quarter for iPhones, with a shipment volume growth of nearly 20% year-on-year," as per Navkendar Singh, associate vice-president at market researcher International Data Corp. (IDC) India.

Critical market

India’s importance as a critical market has been underlined by CEO Tim Cook’s recent remarks in the earnings call last month where he said that the March quarter saw Apple register yet another quarterly revenue record in India—making this the eighth straight quarter, or two full years, of sustained growth for the brand in India. “We did grow by strong double-digit, and were very, very pleased about it. I see India as an incredibly exciting market, and it's a major focus for us. In terms of the operational side or the supply-chain side, we are producing there—from a pragmatic point of view, you need to produce there to be competitive," he said.

Also read |  WWDC 2024: Apple said to provide new generative AI upgrade to Siri. Here's what might change

Apart from India being a large domestic market, the country is eyeing to be a global manufacturing and export hub as well, sector watchers noted. As much as 20% of Indian-made smartphones, and 30% in value terms, were exported in 2022, the highest ever, as per Counterpoint Research data. This was driven by various government incentives and policies that are encouraging more companies to set up manufacturing operations in India, besides firms looking to diversify out of China.

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ABOUT THE AUTHOR
Gulveen Aulakh
Gulveen covers both corporate and economy, and policy sections of Mint. She also covers telecom, IT from the corporate side and disinvestment, finance ministry from the economy side. Gulveen finds the rare mix of sectors she covers to be incredibly interesting.
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Published: 12 May 2024, 06:51 PM IST
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