Apple India iPhone Output Soars to $7 Billion in China Shift

Apple Inc. assembled more than $7 billion of iPhones in India last fiscal year, tripling production in the world’s fastest-growing smartphone arena after accelerating a move beyond China.

By:BLOOMBERG
| Updated on: Apr 14 2023, 08:55 IST
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Apple India iPhone Output Soars to $7 Billion in China Shift. (Bloomberg)

Apple Inc. assembled more than $7 billion of iPhones in India last fiscal year, tripling production in the world's fastest-growing smartphone arena after accelerating a move beyond China.

The US company now makes almost 7% of its iPhones in India through expanding partners from Foxconn Technology Group to Pegatron Corp., people familiar with the matter said. That's a significant leap for India, which accounted for an estimated 1% of the world's iPhones in 2021.

Apple is exploring ways to reduce its reliance on China as tensions between Washington and Beijing continue to escalate. Its longtime partners, who make most of the world's iPhones from sprawling factories in China, have added assembly lines at a rapid pace over the past year, the people said, declining to be named as the information isn't public.

The world's most valuable company struggled last year with chaos at Foxconn's main “iPhone City” complex in Zhengzhou, which drove home vulnerabilities in Apple's supply chain and forced it to cut output estimates. At the same time, Indian Prime Minister Narendra Modi has dished out a spate of incentives to boost local manufacturing.

Apple shares rose 1.1% at 9:31 a.m. in New York.

Of the total production, Apple exported $5 billion of iPhones in the year ended March 2023, nearly four times as much as the previous period, the people said. Apple will likely try to manufacture the next iPhones in India at the same time as in China, sometime in the fall of 2023. If so, that will be the first time that iPhone assembly begins concurrently in the two countries. And if the aggressive expansion of its suppliers continues, Apple could assemble a quarter of all its iPhones in India by 2025. Representatives for the US company declined to comment.

Even before last year's iPhone city flareup, Apple had recognized the need to diversify its supply chain. It successfully lobbied for incentives in India and pushed suppliers Foxconn, Wistron Corp. and Pegatron to ramp up locally. The trio, which together employ some 60,000 workers in India, make models ranging from the aging iPhone 11 to the latest iPhone 14 in the country.

That's helped place Apple at the heart of India's ambitions to become a major manufacturing hub and alternative location to China. Apple is among the world's most exacting when it comes to manufacturing: its production chain encompasses hundreds of companies across the world and employs millions, much of that now in China.

The migration of iPhone production represents an economic triumph for India that could have implications for how other US brands plan their futures. For Apple, the country itself represents a fount of future growth, at a time the Chinese economy is sputtering after years of punishing Covid Zero restrictions.

Apple will open its first two retail stores in India next week, one in the financial hub of Mumbai and another in the capital New Delhi. Chief Executive Tim Cook is scheduled to fly in to personally inaugurate the two stores, underscoring the domestic market's rising importance.

Cupertino, California-headquartered Apple has also sought changes in India's labor laws as part of its effort to expand local production and create mega factories.

Its largest contract manufacturer, Foxconn, plans to invest about $700 million on a plant in a southern state to make phone components and possibly iPhones. Foxconn, Wistron and Pegatron representatives didn't immediately respond to requests for comment.

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First Published Date: 14 Apr, 08:24 IST
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