In late January, Supply Chain Matters called attention to a published report by The Wall Street Journal, citing local government sources, indicating that global smartphone and consumer electronics provider Apple was nearing a deal to manufacture its products locally in India.  The Wall Street Journal is now reporting (Paid subscription required) that production could begin in a matter of 4-6 weeks.  Apple Logo

This latest update indicates that Taiwanese contract manufacturing services provider Wistron will likely manage local manufacturing of iPhone6 and 6S smartphones from an existing production facility located in Bangalore. The facility will add production on the entry level SE model in three months, according to this report. An Apple spokesperson acknowledged to the WSJ that the company was working hard to deploy operations in the country but declined to elaborate further.

The latest report brings forth added information implying that a broader manufacturing and supply chain strategy may be at-play for Apple, one that is different than the January report.  Noted is that the company is discussing with Indian government officials on its additional desires to add various smartphone component manufacturers into India as well to support final assembly as well as export of finished products to other countries. The previous indication was that component parts would be imported from China and the United States. The January report indicated that specific Apple requests included concessions related to tax and tariff exemptions, including a 15-year tax holiday on imports of components and equipment. A new reference is made to Apple CEO Tim Cook’s recent call with analysts where a statement was made that the company intends to invest significantly in India.

From our lens, this added information implies potential moves toward a new segmented supply chain strategy that can possibly reduce the overall production costs for certain iPhone models, making them more price affordable for emerging Asian based consumers. It further implies a shift from a sole dependence on a China-centric supply chain and manufacturing value-added strategy.

With a reported 2 percent of existing market-share within India, Apple has a long way to go to penetrate the second largest consumer smartphone market beyond China.

We do raise a cautionary note however, since most the current information is emanating from state or local government officials as opposed to the government itself. That implies that a lot of back and forth discussions remain in terms of overall cost and regulatory concessions to be granted by the government, not to mention any additional political fallout to existing manufacturers in the country.

As we opined in January, if local, and now, perhaps export based manufacturing of Apple products were to be formally announced, we suspected a reaction emanating from the Twitter account of U.S. President Donald Trump. It’s no secret that Trump has Apple in his crosshairs because of the presence of a large number of Apple’s manufacturing employees throughout China. Not to mention that Apple is the most highly watched supply chain among Wall Street investors and consumers themselves.

Thus, perhaps there will not be any formal government of Apple announcements, not until all the components of the evolving manufacturing and supply chain strategy fall into place.

Bob Ferrari

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