The much coveted iPhone will henceforth be mass produced in India with largest assembler of Apple Inc. handsets, Foxconn Technology Group, deciding to shift its focus away from China.
In future we will play a very important role in India’s smartphone industry, Chairman Terry Gou said at an event in Taiwan. He said Prime Minister Narendra Modi has invited him to India as his Taiwanese company plans its expansion in the country, as per a report appearing in Bloomberg.
It’s not yet clear how Apple’s steps into India will affect its China operations. China has been the company’s most important manufacturing base for years, home to Foxconn’s biggest facilities and hundreds of other partners.
Apple has had older phones produced at a plant in Bangalore for several years, but now will expand manufacturing to more recent models. Foxconn is ready to start trial production of the latest iPhones in the country before it starts full-scale assembly at its factory outside Chennai.
India has become the fastest-growing smartphone market in the world, while China stagnates and Apple loses share to local competitors such as Huawei Technologies Co. and Xiaomi Corp. Apple has been a minor player in India, in part because of its high prices, but local manufacturing would help the Cupertino, California-based company avoid import duties of 20 percent.
For Foxconn, the China market for iPhones is saturated, and labour costs are three times higher compared with India, said an analyst at Counterpoint Research indicating the reason for the shift is still an emerging smartphone market, it has a lot of potential domestically and could serve as an export hub for the region, he said.
Foxconn already has two assembly sites in Andhra Pradesh and Tamil Nadu, where it makes devices for Xiaomi and Nokia. The Indian assembly line of Foxconn’s Hon Hai Precision Industry Co. would serve local and export markets by the time Apple announces its next iPhone models in September.
The Taiwanese contract manufacturer will initially invest about $300 million to set up for Apple with investments to ramp up as capacity expands, persons in know of the company plans said.
Producing phones locally would also help Apple’s retail push in India. The company needs to meet a 30 percent local sourcing rule to be able to open its own stores in the country.
Indians bought more than 140 million smartphones last year, with just 1.7 million sold by Apple, as consumers favoured cheaper models from China.