There are signs of a turning point at the cell phone manufacturer from California: in just a few years, a quarter of all iPhones will be manufactured in India. The global change of course should bring Apple more production security. But it shouldn’t be easy.
Trade war with the USA, technology blockade and possible invasion of Taiwan: In view of growing geopolitical tensions between the West and China, Apple is apparently increasingly looking for alternative production sites away from the People’s Republic. As the “Wall Street Journal” (WSJ) reports, the cell phone giant and its most important supplier Foxconn are aiming to do so within the next two to three years at least Produce 50 million iPhones annually in India. According to insiders, tens of millions more units are expected to be added in the future. If the plans work, a quarter of all iPhones would soon be manufactured in India.
In recent years, Apple has already gained a foothold in India. These first steps are said to have been encouraging, so that Apple is now creating the conditions for greater expansion, reports the “WSJ”, citing sources in the supplier chains. In the southern Indian state of Karnataka, Foxconn is currently building a factory north of Bangalore that is scheduled to go into operation in April and has a production capacity of 20 million cell phones. Plans for another mega-factory of the same size as in Karnataka are already in the drawer, writes the paper.
Together with the expansion of the existing Foxconn main plant near Chennai and a factory recently purchased by the Indian industrial group Tata, it is becoming apparent that Apple is aiming to produce 50 to 60 million iPhones annually in India within the next two to three years, people said directly People familiar with the newspaper’s plans. According to data from market analysts, Apple sold 225 million iPhones worldwide last year. The group itself has not published sales figures for several years.
Plan B for the big bang with Beijing
With the change of course, Apple apparently wants to reduce its massive dependence on China. There is now open hostility between Beijing and Washington: the USA and the People’s Republic are not just fighting for dominance in Asia. Together with Japan and the Netherlands, the Biden administration has set up a technology blockade that is intended to cut off manufacturers in the Middle Kingdom from high-performance chips and AI technology.
A possible invasion of Taiwan in the coming years also hangs over the simmering trade conflict. In the event of an open conflict, Apple would lose almost all of its manufacturing capacity for its most important product. That’s why the Californian giant is increasingly trying to get a foothold elsewhere. In addition, Apple is in China is no longer welcome: It was only in the fall that the Chinese government banned its officials from using iPhones – probably in retaliation for Washington’s measures.
De-risking China remains difficult
Not only the iPhone manufacturer Foxconn, but also other Apple suppliers are expanding their network in India, making the country increasingly attractive as a competitive location for the Californian internet giant. The Japanese battery manufacturer TDK, for example, just this week announced a new factory that will supply iPhones assembled in India. According to the newspaper, hourly wages are now below the Chinese level.
But Apple doesn’t have nearly as much freedom in democratic India as it does in autocratic China. Because there are real trade unions on the subcontinent. According to reports in the Indian media, Apple had been lobbying local politicians behind the scenes for months to relax the strict working time rules in order to bring shift lengths to the level of Chinese iPhone factories. They also had brief success in the state of Tamil Nadu, where the Foxconn main plant is located near Chennai. But in the end, the country’s head gave in under pressure from activists – and withdrew the permission for the 12-hour day just a few weeks after it was granted.
In the end, despite the relocation plans, China is likely to remain the most important production country for Apple due to its sheer weight. The mega-factories there, like those in Zhengzhou, are too well-established and tried and tested: At peak times, almost 300,000 Foxconn employees live and work in the “iPhone city”. There is an extensive network of suppliers around the complex that produce the necessary parts for the cell phones. And the critical raw materials needed for production are also available locally. A larger part of all of this would first have to be imported into India. But as the Chinese saying goes: Every journey begins with the first step.