Supply Chain Matters calls reader attention to a report by Bloomberg indicating that upwards of 14 percent of Apple iPhone production, equating to $14 billion, is now being produced within India.

 

Background

Throughout 2022 and 2023, we have highlighted for readers the various indications of Apple’s unfolding China Plus sourcing moves.

That culminated in our research arm’s published December 2023 Supply Chain Matters update, Apple’s Unfolding China Plus Sourcing Strategy for iPhone Production.

The commentary provided added perspective regarding the Covid related population restrictions in late 2023 that led to meaningful production disruptions occurring with Apple’s largest contract manufacturing facility producing the latest generation of iPhones. That had a measurable impact on Apple’s iPhone sales performance for the holiday quarter.

We further called attention to a published report at the time by The Wall Street Journal indicating that Apple was aiming to eventually produce one quarter of iPhone production within India. Noted was that expansion plans focused on the Foxconn facility in Chennai, and an existing production facility recently acquired by India based conglomerate Tata that were equated in the report to the eventual capacity to ultimately produce 50 million to 60 million iPhones annually. The models of smartphones produced range from former introduced models with broad mass market appeal up to the latest generation of models. The report echoed that China would remain a key growth market for iPhones, but the sourcing shifts were an effort to in essence provide the basis for Apple’s China Plus sourcing.

Further Confirmation

According to this week’s published Bloomberg report: Apple assembled $14 billion of iPhones in India last fiscal year, doubling production in a sign it’s accelerating a push to diversify beyond China.”  The report cites people that are familiar with the matter but declining to be named because this information is not public.

This report attributes this ongoing ramp-up as suggesting that Apple is accelerating efforts to offset its former reliance on China as a primary source for iPhone production and supplier network capabilities. While China remains the largest iPhone production hub, revenues “are plunging, hit by ascendant rivals Huawei Technologies Co. and an expanding ban on the use of foreign technology in the workplace.”

Outlined were ongoing production investments among three contract manufacturers including Foxconn Technology, Pegatron Corp., and Tata Group, which acquired the facilities of Wistron Corp. in 2023 with plans to eventually be one of the largest iPhone producers in India.

The report observes that the likes of Alphabet, Cisco Systems, Google and Tesla have each “been keen to make hardware” within India. Bloomberg Intelligence analyst Steven Tseng is specifically cited as declaring that: “Ending near-exclusive dependence on China’s tech supply chain is costly and complicated, but the country’s diminished appeal demands a new approach.” He further states: “The tech supply chain’s diversification away from mainland China could become inexorable.

At this same time last year, we highlighted Bloomberg’s indication that iPhone production within India had reached the equivalent of $7 billion.

The latest implication is that it has now doubled.

Apple reportedly declined to comment on the published Bloomberg report.

 

Added Thoughts

Supply chain logisticians are readily aware that the interior transportation, seaborne and air freight infrastructure across India are still a work-in-process that will require added time to meet the requirements for being a global production hub. So will various industry specific supply networks.

But, as has occurred in emerging regions, added foreign direct investment and an increased priority among various governmental and infrastructure bodies for growing manufacturing capabilities will eventually come. If not, other China Plus alternatives will come to the forefront of global based branded companies.

 

Bob Ferrari

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