Apple bets on India to counter US-China trade spat, eyes 50 mn iPhones by 2028 – Crypto News

The move, which would entail significant capacity build-up at Apple’s India partners, comes in the backdrop of a US-China trade standoff that threatens the company’s long-standing supply chain balance. China currently accounts for 80% of all iPhone manufacturing for Apple, according to data from market researcher International Data Corporation (IDC), and India has 10% share.

Earlier on Friday, a report by Financial Times said that Apple could make all iPhones bound for the US market in India by next year, amounting to 60 million units in volume.

“This would be an exaggerated target—ramping up a stable supply chain and doubling capacity does not happen within mere months,” one of the people cited above said. “There is, however, a clear understanding at Cupertino that Apple’s India production plans are now on steroids after US president (Donald) Trump’s volatile foreign trade policies and the China situation.” 

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Two others said that Tata Electronics, which accounted for a quarter of all iPhones made in India as of January, is slated to be the biggest benefactor of Apple’s India push. The company could contribute the most to ramping up Apple’s capacity of assembling iPhones in India and exporting them to the US.

Apple did not immediately respond to Mint’s emailed queries. Tata Electronics declined to comment.

Reaching a target of 50 million iPhones by 2028, however, would require a significant upgrade of capacity among Apple’s manufacturing partners in India. Alongside Tata Electronics, Taiwanese contract manufacturer Foxconn’s India joint venture—Bharat FIH Ltd—is also a key iPhone production partner for Apple.

It is because of this tall target that Apple is looking for its India manufacturing partners to ramp up production capacity, the people cited above said.

“There are discussions that the US government’s potential long-term exemptions that could be on offer to Apple would be hinged upon them making efforts to move manufacturing away from China in the short term,” the third person cited above said. “After all, those in the sector understand that setting up an entire supply chain in the US would not be possible within a year or two. Shifting production to trusted geographies could thus be crucial for Apple.” 

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To be sure, a 2018 report by Reuters had claimed that by 2028, Apple planned to make one of every four iPhones in India. At the end of last year, supply chain estimates said that Apple makes roughly 20 million iPhones in India, which are supplied to various global markets and also to Indian retailers.

Mixed reactions

Some industry stakeholders expect this to be beneficial for India in the long run, while others point to the huge gap between assembly of iPhones that the country is currently doing, and the expertise to add more local inputs, which will take time.

Ashok Chandak, president at industry body India Electronics and Semiconductor Association (Iesa), said that the move will help “expand the size of India’s electronics manufacturing economy, and bring India closer to its target of a $500 billion electronics market by 2030″.

“Apple is, of course, one of India’s biggest contributors to electronics manufacturing and exports, and India has gained from Apple’s brand weight by showcasing to the world that it can assemble what is considered to be the most sophisticated engineering in smartphones right now,” Chandak said.

He added that going forward, ramping up capacity further will only prove that India can maintain consistency at scale, “which is the final step before India’s electronics economy starts moving up the value chain”.

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Others, however, underlined that simply increasing capacity may not be beneficial right away. Navkendar Singh, associate vice-president at IDC India, said that India’s local value addition, especially in iPhones, “is still very low”.

“The largest part of the domestic value addition for iPhones comes from its semiconductor chips and the display, none of which are so far made in India,” Singh pointed out, adding that overall, the manufacturing ecosystem in India sees around 10% local value addition for iPhones, which is the single-largest device made in India in terms of the country’s electronics exports value to the rest of the world. 

“This shows that for India, there is a long way to go for the domestic assembly and manufacturing ecosystem to replicate the scale of success that China has encountered, before it can show its actual value in the global technology supply chain,” Singh added.

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