Apple iPhone mass production is shifting from China to India — solving a key problem for the company

Apr 15, 2019, 18:25 IST

Apple iPhone manufacturing, Foxconn Technology Group has announced plans to shift its production lines from China to IndiaPexels

Apple's top manufacturer, Foxconn Technology Group, is shifting its manufacturing lines to India for mass production.
The chairman of Foxconn, Terry Gou, stated that India has a “very important role” to play in the smartphone industry.
Increasing production in India could finally mean that Apple can source 30% of its materials locally, making the company eligible to open its 'Apple Stores' in the country.

Apple's primary device manufacturer, Foxconn Technology Group, has plans to shift the mass production of iPhones to India this year according to Terry Gou, Foxconn Technology Group chairman. For the longest time, Foxconn's production of Apple devices has been concentrated in China indicate a shift in their strategy going forward.

In the future we will play a very important role in India's smartphone industry. We have moved our production lines there.

Terry Gou, Chairman of Foxconn Technology, at an event in Taiwan

And manufacturing iPhones in India would solve a problem that Apple has been struggling with for years — opening its exclusive 'Apple Stores' in the country. The issue has always been that Apple needs to source at least 30% of its material in India, a target it has continuously failed to meet.

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We'd like to put stores there (India). We would like some of the duties and so forth that are put on the products to go away. And we're working closely with the team there.

Tim Cook, Apple CEO, during the company’s earnings call in January

Earlier this year, the company announced its plans to roll out Flagship Apple Premium Resellers (FAPR) in the four cities that have the largest demand for Apple products — New Delhi, Mumbai, Bengaluru and Chennai.

While other brands, like Xiaomi and ASUS, jumped on the 'Make in India' bandwagon, Apple was counting on the Indian government to offer concessions on manufacturing. And, so Apple had to stick to selling its devices through resellers, who in turn, have had to discount the premium phones in order to make sales.

Crossing from East Asia to South Asia

Apple has been struggling in China as the country's GDP growth slows down and in December 2018, the manufacturing sector was seen contracting for the first time in 19 months.

While the US-China trade war is partially to blame, competition from local players like Huawei and the slowdown in upgrade cycles are also contributing factors.

One of those factors, weak macro-conditions in some emerging markets, was significantly more severe than we originally foresaw, especially in Greater China. That challenge was compounded by quarterly iPhone upgrades that were lower than we anticipated.

Tim Cook, Apple CEO, during the company’s earnings call in January

In simple terms, it's more expensive to manufacture in China and the demand for iPhones is slowing down. In India, on the other hand, the smartphone market is the fastest growing among major markets according to Counterpoint.