Apple Inc.’s Taiwanese contract manufacturer Pegatron Corp. has started assembling the latest iPhone 14 model in India.
This makes Pegatron the second Apple supplier to produce the
iPhone 14 in the country, people familiar with the matter told Bloomberg News.
Foxconn's plant in Zhengzhou- the largest manufacturing
facility for iPhones in the world - was recently put under lockdown as China
sticks to its strict zero covid policy.
That situation put a spotlight on Apple’s deep reliance on
China, though the India expansion was in line with diversification plans
already in place, the people said.
Foxconn began making the iPhone 14 in India in September,
mere weeks after its global unveiling and much closer to parity with the start
of production in China, where the vast majority of iPhones are still made.
Cupertino, California-based Apple is seeking alternative
production hubs amid a trade war between Washington and Beijing and tight enforcement
of Xi Jinping’s Covid Zero policy in China. At the same time, New Delhi is
positioning India as a competitor to China’s manufacturing prowess.
Apple's contract manufacturers in India - Foxconn, Wistron
and Pegatron - are on an expansion phase, adding more assembly lines to their
facilities to offset a slowdown in iPhone manufacturing in China ahead of the
upcoming Chinese New Year amidst robust local demand, industry executives
familiar with the matter told ET.
Foxconn and Pegatron have their facilities in Tamil Nadu,
while Wistron makes iPhones out of Bengaluru. Apple currently produces the
iPhone SE, iPhone 12, iPhone 13 and iPhone 14 (basic) models in India. However,
all the Pro models sold in the country are imported.
Wistron is also about to open another manufacturing facility
in Kolar by the end of November, with production beginning from January
onwards, a second executive said.
Wistron presently has four assembly lines for iPhone 14
production at their plant in the Kolar industrial area. One in Peenya,
Bengaluru, is out of commission, while a third facility is used for repair of
Apple products.
Foxconn is also expanding one of its factories in India
close to its Chennai facility, with hiring currently on, said another
executive. Pegatron started making iPhones for Apple for the first time in
September.
China's contribution to global iPhone production is expected
to drop to 91.2-93.5% of global shipments in 2022, from 95.8% in 2021. India's
contribution will increase to 5-7% of global shipments and 85% of local demand
by this year's end, up from 3% last year, according to Counterpoint Research.
Apple’s India shipments in 2023 is expected to surpass the
record 6 million units anticipated in 2022 due to rising demand for premium
smartphones backed by discounts and cash back offers, according to IDC India.
Apple’s shipments in 2021 was 4.8 million.
All three manufacturers are part of the government's Rs
41,000-crore production-linked incentive program (PLI) with Foxconn and Wistron
having met the first-year targets in FY22. Pegatron started making iPhones from
this year and will be eligible for claiming benefits in the next fiscal through
March, 2023.
One big hurdle for more production shifting out of China is
that the majority of iPhone components are still built there and have to be
shipped to wherever devices are assembled, Counterpoint senior analyst Ivan Lam
said.
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