Apple Hitting Issues In Ramping Up India Manufacturing – Report

Apple’s decision to transition some of its iPhone manufacturing away from China and to India is not without its challenges.

This is according to the Financial Times, which cited people familiar with Apple’s operations as its sources. The firm is reportedly experiencing a number of issues and challenges in India.

It was back in September 2022 when Apple admitted that it had begun manufacturing some of its iPhone 14 handsets in India, soon after the launch of the latest handsets.

India move

That move came as tech manufacturers explore alternative production sources away from China, amid Beijing’s ongoing geopolitical tensions with Western nations, coupled with its strict pandemic restrictions that have disrupted supply chains for many industries.

Apple has already moved some of its iPhone manufacturing out of China to other countries, most notably India, where it started manufacturing the iPhone 13 earlier in 2022, and was also considering assembling iPad tablets there as part of its diversification strategy.

That said, Apple has been manufacturing lower-end iPhones in India since 2017, first via Wistron Corp and later by Foxconn – as it worked with the Indian government’s push for local manufacturing.

In August 2022 it was reported that Apple had begun talks with two of its suppliers (Luxshare Precision Industry and Taiwan-based Foxconn, otherwise known as Hon Hai Precision Industry Co Ltd) about manufacturing the Apple Watch and Macbook in Vietnam.

Market analysts have previously estimated that Apple could turn India into a global iPhone manufacturing hub by 2025.

JP Morgan analysts predicted earlier this move Apple will move 5 percent of global iPhone 14 production to India by late 2022 and expand its manufacturing capacity in the country to produce 25 percent (one in four) of all iPhones by 2025.

India is the world’s second-largest smartphone market after China.

Local obstacles

Now the Financial Times this week reported that Apple is hitting stumbling blocks in its effort to increase production in India.

According to the FT, Apple has been sending product designers and engineers from California and China to factories in southern India, to train locals and help establish production, according to four people familiar with the operations.

The engineers and designers reportedly often spend weeks or months at a time in factories to oversee manufacturing.

But the FT reported that Apple’s experience in recent months has demonstrated the scale of the work to be done in the country.

At a casings factory in Hosur run by Indian conglomerate Tata, one of Apple’s suppliers, just about one out of every two components coming off the production line is in good enough shape to eventually be sent to Foxconn, Apple’s assembly partner for building iPhones, according to a person familiar with the matter.

This 50 percent “yield” fares badly compared with Apple’s goal for zero defects, the FT reported, adding that the company’s process of expanding in India has been slow in part due to challenges in logistics, tariffs and infrastructure.

Two people that have worked in Apple’s offshore operations said the factory is on a plan towards improving proficiency but the road ahead is long.

Last month, India’s trade minister reportedly said that Apple wants India to account for up to 25 percent of its production from about 5 – 7 percent currently.