Apple faces steep learning curve in 'Make in India'

Jingyue Hsiao, DIGITIMES Asia, Taipei 0

Credit: AFP

It's an inevitable job for Apple to diversify its supply chain outside of China. However, low yields and a lack of a sense of urgency mean a steep learning curve for Apple to manufacture products in India.

Tata has begun trial production of iPhone cases at its Hosur plant, but people familiar with the matter told Financial Times that Tata has only about 50% yields for iPhone cases, far lower than Apple's goal for zero defects.

Furthermore, compared with iPhone assembly plants in China, where things can be done at inexplicable speed, operations in India are not running at that sort of pace, which can be attributed to a lack of urgency. Financial Times also quoted sources saying that due to logistics, tariffs, and infrastructure, Apple's expansion in India has been slower than in Southeast Asia, where ten nations are members of RCEP.

An earlier report by Bloomberg in August 2022 states that it's been difficult for Apple to ramp up iPhone production in India as it was more challenging to ensure secrecy before products launch in India than in China.

Still, it would be necessary for Apple to expand product manufacturing in India. Compared with India, where the median age is 28.4 years with over 1.3 billion people, China, with a median age of 37.9 years, saw its first population decline in decades in 2022. Bloomberg Intelligence analysts said in a research note that China's population aging is making it harder for EMS providers to hire workers, adding that nearly half, 42%, of Foxconn's employees are under 30, while only 18% of China's workforce is under 30. Not to mention the geopolitical tensions that may rip global supply chains apart.

Tim Cook, who served as the COO under former Apple CEO Steve Jobs and oversaw Apple's production expansion in China amid China's openness and WTO membership leading to the world factory ever seen in history, is facing a similar issue regarding the quest for the next world factory.

Apple's diversification efforts have somehow bore fruit, as the Indian Cellular and Electronics Association (ICEA) data shows that thanks to Foxconn, Wistron, and Pegatron, iPhone exports from India have increased from INR110 billion (US$1.33 billion) in fiscal 2022 (April 2021 to March 2022) to INR300 billion in the first ten months of fiscal 2023, accounting for 23% and 42% of India's total mobile phone exports, respectively, Business Standard reports.