apple india news: Apple India suppliers expand capacity

apple india news: Apple India suppliers expand capacity
Apple’s contract manufacturers in India (Foxconn, Wistron and Pegatron) are in an expansion phase, adding more assembly lines to their facilities to make up for a slowdown in iPhone manufacturing in China ahead of the upcoming Chinese New Year amid strong local demand, industry executives familiar with the matter said

The ongoing lockdown at Foxconn’s plant in Zhengzhou, China, the world’s largest iPhone manufacturing facility, though won’t be a trigger for Apple to ramp up manufacturing in India right away, they added. That’s because it’s easier for Foxconn to simply shift production to another unit inside mainland China, rather than import components into India, which will take longer and cost more, experts say. Furthermore, the partners in India do not yet have the capacity and technical expertise to handle the additional production.

Market insiders also expect a limited impact on India’s shipments from a temporary reduction in iPhone production in China, given that the peak holiday season is over and October-December is traditionally a slow quarter.

“I see the shift to India regardless of the current context. The momentum of Make in India (for Apple) will continue to gain traction,” said Prabhu Ram, head of the industry intelligence group at CMR. “In fact, Foxconn is already moving production to Shenzhen to overcome the cutbacks.”

Navkender Singh, Associate Vice President of IDC India, added that shifting production from China to India in the near term will require experience in producing higher models, additional production lines, and certifications from the Bureau of Indian Standards (BIS) and others. which is complicated and takes time

Instead, Apple’s manufacturing expansion in India is being timed with Chinese New Year in February, when the US smartphone giant expects labor shortages. This also ties in with Apple’s planned move to reduce its reliance on China for manufacturing, experts said.

“Apple’s three Indian contract manufacturers are expanding their capabilities to take on more production,” said one of the executives familiar with the matter.

Foxconn and Pegatron have their facilities in Tamil Nadu, while Wistron makes iPhones in Bangalore. Apple currently produces the iPhone SE, iPhone 12, iPhone 13, and iPhone 14 (basic) models in India. However, all Pro models sold in the country are imported.

IDC’s Singh said that Apple is already importing and certifying components for the iPhone 14 Plus model in India as well. “They could be postponing production due to low demand.”

Wistron is also poised to open another manufacturing plant in Kolar at the end of November, with production to start from January, a second executive said.

Wistron currently has four assembly lines for iPhone 14 production at its plant in the Kolar industrial area. One in Peenya, Bangalore, is out of service, while a third facility is used to repair Apple products.

Foxconn is also expanding one of its factories in India near its Chennai facility, and is currently hiring staff, another executive said. Pegatron first started making iPhones for Apple in September.

China’s contribution to global iPhone production is expected to fall to 91.2-93.5% of global shipments in 2022, from 95.8% in 2021. India’s contribution will rise to 5-7% of global shipments and 85% of local demand by the end of this year. up from 3% last year, according to Counterpoint Research.

Apple’s shipments to India in 2023 are expected to exceed the record 6 million units anticipated in 2022 due to growing demand for premium smartphones backed by discounts and cash-back offers, according to IDC India. Apple’s shipments in 2021 were 4.8 million.

All three manufacturers are part of the government’s Rs 41,000 crore Production Linked Incentive (PLI) program with Foxconn and Wistron meeting first year targets in FY22. Pegatron started making iPhones from this year and will be eligible to claim benefits in the next tax year through March 2023.

According to a JP Morgan report, Apple plans to move 25% of its iPhone production to India by 2025 and 5% of global iPhone 14 production to India by the end of 2022 in a bid to diversify its manufacturing base, which it is currently largely dependent on China.

India’s monthly mobile exports crossed the $1 billion mark for the first time in September, mainly driven by exports from Apple and Samsung, which account for about 75-80% of exports thanks to the PLI scheme introduced in April 2020 to move manufacturers away from China and other mobile manufacturing countries.

Under the scheme, foreign companies must make incremental output of Rs 4,000 crore, Rs 8,000 crore, Rs 15,000 crore, Rs 20,000 crore and Rs 25,000 crore from the first to the fifth year, to take advantage of government incentives.

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