Out in Front

Apple still relies on China for components supply despite expansion in India

Jingyue Hsiao, DIGITIMES Asia, Taipei 0

Apple CEO Tim Cook and Indian PM Narendra Modi in 2016. Credit: AFP

Despite developments that indicate India will become one of Apple's major production hubs, it is unlikely for India to challenge China's manufacturing relationship with Apple in the foreseeable future, according to reports and analysis.

Although Apple has begun assembling iPhones and is reportedly exploring making AirPods in India, unnamed sources told The Economic Times that Apple has no plan to make Macs and iPads in the country, which would disappoint the Indian government, which provides the Production Linked Incentive (PLI) scheme for IT hardware to attract notebook and tablet manufacturers, especially Apple, to make in India.

China-based BYD planned to invest in iPad assembling in India in 2021 but failed to acquire investment approval amid the India-China geopolitical tensions before it turned to Vietnam in 2022. Indian media recently reported that China-based electronics manufacturers might get the green light for their investment projects on the condition that they form joint ventures with Indian counterparts. However, The Economic Times reported that electronics end-product manufacturers rarely operate under joint ventures.

On the other hand, Tata is reportedly making iPhones in India, and a Trendforce report said that Tata might receive 5% of iPhone 15 and iPhone 15 Pro orders from Apple in 2023.

However, another The Economic Times story reveals the lack of a developed iPhone manufacturing ecosystem in India, where iPhone parts have to traverse the Indian border twice, or even three times, before reaching the state of final assembly.

According to the report, the iPhone case manufacturing requires a special grade of lightweight aluminum supplied by Taishan City Aluminum Manufacturing and Hodako. After importing the aluminum that has undergone CNC and molding, Tata's Hosur plant will assemble mechanical components, such as tiny brackets, screws, camera cutouts, and the USB port, before shipping them back to China for final assembly. Tata primarily churns out semi-finished iPhone SE in India but initiated trial runs to part assemble iPhone 15, said the report. Still, the fact that Tata joins the ranks of Apple suppliers has benefitted Indian suppliers, such as Merck Life Sciences, Thermo Fisher Scientific, and Carborundum Universal.

Bloomberg Intelligence analyst Steven Tseng said that Apple is still relying on Chinese-made components, especially those insensitive items, such as non-chip components. Despite a spate of suppliers' relocation into Southeast Asia and India, Apple has increased its reliance on certain Chinese-made components, such as acoustics, glass, connectors, and display panels. According to his estimation, 46% of Apple suppliers' plant sites were located in China in fiscal 2021, down a bit from 50% in fiscal 2018.