On September 9th, US time, Apple will hold its annual autumn conference. As usual, the new iPhone 16 and iPhone 16 Pro series will be unveiled at this conference, and major industrial chains have entered a period of intensive stocking. Compared with previous years, a major change this year is that factories in China and India have started assembling the latest iPhones together, and the Pro series, which has been mainly produced in China before, is also being produced in India for the first time, which has attracted widespread attention in the industry. The Indian media even directly called it "an important milestone". However, many analyses believe that for the "Indian Apple supply chain", there is still considerable difficulty in making greater progress.
The process of Apple's factory migration to India
In 2017, Apple launched its manufacturing business in India for the first time and produced the iPhone SE released in 2016; in 2018, Apple began to produce the iPhone 6s released in 2015 in India; in 2019, Apple further expanded its production in India and produced the iPhone 7 released in 2016 and the iPhone XR released in 2018; in 2020, Apple produced the iPhone 11 released in 2019 in India; in 2021, it produced the iPhone 12 released in 2020 in India.
In 2022, Apple started to produce the latest iPhone 14 in India, and the time for Foxconn to produce the new iPhone in China was shortened from about 6 to 9 months earlier than that in India to 2 months. In 2023, the time for Apple to produce the iPhone 15 in India has been synchronized with the global release time, and later it also produced the iPhone 15 Plus locally.
From the initial trial to the production of old model products; from following a few months after the Chinese manufacturing plant to produce new model products, to synchronously producing new models; and then to now producing high-end models. This process not only reflects Apple's emphasis on the Indian market but also embodies the adjustment and optimization of its global supply chain strategy.
A recent report released by Bloomberg shows that the factory of Apple's supplier Foxconn located in Tamil Nadu will start producing iPhone 16 Pro and iPhone 16 Pro Max models. For undertaking the production of the latest Apple products this time, the reaction within India is very positive. The Indian "siliconindia" website reported that the upcoming iPhone 16 Pro may represent a significant shift in Apple's manufacturing strategy in India. At the same time, Apple's production expansion in India is also regarded as a positive signal for the development of India's electronic manufacturing industry, which may attract more foreign direct investment and further promote India's position in the global supply chain.
It is understood that Apple has been locally producing mobile phones in India in recent years, but most of the products involved are old models. According to statistics, India currently undertakes part of the production tasks of Apple products including iPhone SE, iPhone XR, iPhone 12 to iPhone 15. In 2023, about 30 million iPhones were assembled in Indian factories, and the production capacity in the first half of this year has increased to 18 million. These devices are not only supplied to the Indian local market but also exported to overseas markets such as the United States.
The "2023-2024 Economic Survey" submitted on July 22 shows that Apple assembled iPhones worth 14 billion US dollars in India in fiscal year 2024, accounting for 14% of its global iPhone production. Apple's goal is to produce one-fourth of all its iPhones in India in the next 3 to 4 years. India hopes that Apple will localize its entire product series in the next few years, including laptops and desktop computers.
Previously, Apple had tried to cooperate with BYD to produce iPads in India but failed to implement it. It is reported that Apple may resume the preparation work for producing iPads in India through Foxconn.
In addition, Apple plans to start producing AirPods in India early next year. While Apple's production capacity in India has increased, it has also increased local employment opportunities. The "Siliconindia" website quoted a recently released report as saying that since the Indian government introduced the "Production Linked Incentive", Apple and its suppliers have created a total of about 165,000 direct employment positions.
According to the India Briefing report, Apple's three contract manufacturers in India, including Foxconn, Wistron (now Tata Electronics), and Pegatron, have created 80,872 direct employment positions. In addition, the broader supplier network, including companies such as Salcomp and Motherson, has created about 84,000 direct employment positions.
The rapid growth of the Indian market and the government's support policies have made Apple have high hopes for the Indian market and regard it as one of the key markets for Apple's future growth. At the beginning of this year, in Apple's earnings call conference, "India" was mentioned 15 times. Apple's CEO Cook said that he is "very optimistic about India" and it is "our focus of attention".
Contrary to Apple's "zero defect"
India released the "Made in India" iPhone 15 on September 22 last year. At that time, many local customers said they would not buy it. On the one hand, the price is higher than that in Europe, the Middle East, and other regions. On the other hand, there is no guarantee of quality.
However, "Made in India" has been criticized in the market in recent years. Taiwan's "China Times News Network" reported in July that although the proportion of iPhones produced by Indian factories is only 10%, there are many problems. Among them, the yield rate of iPhone foundry in Indian factories (only about 50%) and the hygiene management (E. coli exceeding the standard) problems directly led to unsatisfactory product sales.
The Financial Times recently reported that in an iPhone parts factory operated by an Indian company, only one out of every two parts is intact and can be sent to Foxconn's assembly plant. This 50% "pass rate" is very different from the "zero defect" production standard that Apple has long adhered to. Some disassembly videos posted by video bloggers on social med
ia also revealed various flaws in the Apple phones assembled in India, such as obvious fingerprint marks on the motherboard and dust inside the camera.
The Nikkei Asian Review quoted an analyst from the technology research company Counterpoint Research as saying that as one of the main smartphone assembly places outside of China, India has benefited. Major brands are seeking to diversify production locations and develop the Indian market.
But in the next few years, India's growth in Apple's supply chain will be limited to the final product assembly stage, and the production of more critical electronic and mechanical components will still be concentrated in China because India cannot compare with China in terms of efficiency, infrastructure, and talent reserves.
The reversal of Foxconn shows the problem
Due to the above challenges, Foxconn, the main contract manufacturer of Apple that has gradually shifted low-end manufacturing to India and Vietnam in recent years, has seen a reversal. In late July, Foxconn announced that it would invest 1 billion yuan to build a new business headquarters building in Zhengzhou, Henan, and began to massively recruit new employees in its Zhengzhou factory in China to meet the production demand of the iPhone 16 series. According to Hong Kong's "Asia Weekly" report, from the end of June to the beginning of July, Foxconn in Guanlan, Shenzhen, Guangdong was also accelerating recruitment. This shows that Foxconn is actively expanding its production line in China to ensure the smooth launch of Apple's new products.
"Although Apple has been constantly striving to diversify its supply chain and transfer more production to other places in Asia in the face of geopolitical risks, China remains the company's main manufacturing base." According to a report by Hong Kong's "South China Morning Post", Apple's updated supplier list in April shows that in the previous fiscal year, the company added 8 new suppliers in mainland China and eliminated 4. This is the first time since 2021 that the number of new suppliers added by Apple in China has exceeded the number eliminated. The report said that this change not only reflects Apple's fine-tuning of its global supply chain strategy but also further highlights China's important role in global manufacturing and supply chain management.
Conclusion
WLS Electronic Components believes that Apple's increase in investment in the Indian market is partly due to geopolitical considerations rather than a simple market choice. On the other hand, although the wealthy class in India and the consumer group that can afford Apple products cannot be compared with China, it is still a market that cannot be ignored.
In addition, by establishing an industrial chain in India, Apple can reduce the cost of the entire supply chain and thus gain a more favorable position in negotiations with Chinese suppliers. Therefore, despite some challenges, Apple is still optimistic about the potential of the Indian market and continues to invest locally. However, in the manufacturing field, there are obvious limitations in India compared with China. Although the labor cost in India may be relatively low, India's logistics cost is several times that of China, and its labor skills proficiency and overall functional efficiency do not have an advantage over China. 
ia also revealed various flaws in the Apple phones assembled in India, such as obvious fingerprint marks on the motherboard and dust inside the camera.
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