India's iPhone Exports Reach Record High of $2.5 Billion

Apple Inc. exported more than $2.5 billion of iPhones from India from April to December, nearly twice the previous fiscal year’s total. This underscores how the US tech giant is accelerating a shift from China, as geopolitical tensions rise.

According to people familiar with the matter, Foxconn Technology Group and Wistron Corp. have each shipped more than $1 billion of Apple's marquee devices abroad in the first nine months of the fiscal year ending March 2023. Pegatron Corp., another major contract manufacturer for Apple, is on track to move about $500 million of the gadgets overseas by the end of January, the people said.

Apple's rapidly growing export numbers illustrate how it is ramping up operations outside of China. The chaos at Foxconn's main plant in Zhengzhou exposed vulnerabilities in the Cupertino-headquartered company's supply chain and forced it to trim output estimates. That compounded a broader problem with evaporating demand for electronics as consumers weigh the risks of a global recession.

Apple, the world’s most valuable company, began assembling its latest iPhone models in India only last year. This is a significant break from its previous practice of reserving much of the assembly work for giant Chinese factories run by its main Taiwanese assemblers, including Foxconn.

As China's iPhone factory struggles, India has a chance to swoop in and take over the market. India is already the world's second-largest smartphone market, and with China's recent problems, it has a chance to become the largest. India has a large population of young, tech-savvy consumers, and if it can provide them with the products they want at a good price, it could become the dominant player in the smartphone market.

Apple has added a new iPhone 14 manufacturer in India, as the company looks to shift production away from China.

The new manufacturer, Wistron, will produce the iPhone 14 in India, joining Apple's existing suppliers there. The move is part of Apple's ongoing efforts to diversify its manufacturing base away from China, where the majority of its products are currently made.

Apple has been looking to reduce its dependence on China for some time, and this latest move is part of that effort. The company has been working to expand its manufacturing operations in other countries, including India, in order to reduce its reliance on China.

So far, these efforts have been successful, and Apple is now manufacturing a significant portion of its products outside of China.

Apple's exports from India are doubling, providing a boost to Prime Minister Narendra Modi's Make in India initiative.

The iPhone maker is now exporting India-made phones to European markets such as the Netherlands, the United Kingdom, and France, according to a new report from The Times of India.

This is a significant increase from last year, when Apple was only exporting to a handful of markets in the Middle East.

The Make in India initiative was launched by Prime Minister Modi in 2014 with the goal of making India a manufacturing powerhouse. So far, the initiative has had mixed results, but the doubling of Apple's exports is a sign that it is starting to gain traction.

India is looking to offer $550 million in incentives to attract Apple and other tablet makers to set up production in the country. The move is part of the government's efforts to boost the country's manufacturing sector and create jobs. India has been trying to attract foreign companies to set up manufacturing operations in the country, but so far has had limited success.

Apple has started making the iPhone 14 in India, weeks ahead of schedule. This is a big win for the company, as it will help them to better meet demand for the new phone. India is a key market for Apple, and this move will help to solidify their position there.

As India's share of iPhone production rises, this bodes well for Prime Minister Narendra Modi's plan to make the country an alternative to China as a factory to the world.

China's Covid Zero policies and an episode of violence at the Zhengzhou plant have exposed the dangers of relying on the country. While Beijing has since dropped that approach to containing the virus, Apple and other global names are exploring alternative locations more than ever before.

India's vast workforce, support from Prime Minister Modi, and a thriving local market make it an attractive destination for electronics manufacturing. Foxconn, Apple's largest supplier, began building facilities in the country more than five years ago in anticipation of a need to extend its geographic range.

One recent selling point for Foxconn and Wistron is a raft of new government incentives. These incentives are a cornerstone of Modi’s drive to make India an electronics manufacturing hub. Foxconn has won 3.6 billion rupees ($44 million) of benefits in the first year of the so-called production-linked incentives scheme. Wistron’s claims are currently being processed.

Apple, Foxconn and Wistron representatives did not respond to requests for comment via email. A Pegatron spokesperson declined to provide any comment.

India offers a number of benefits to Apple's iPhone supply chain, including cost savings and market potential. Its ample labor supply and low wages make it an attractive option for EMS providers such as Hon Hai and Pegatron, who are operating on thin margins. Additionally, India's Production-Linked Incentives (PLI) offer subsidies of 4%-6% of production costs for five years, making it an even more attractive option for companies looking to reduce costs.

Steven Tseng is an analyst who specializes in the technology sector. He has worked for major firms such as Goldman Sachs and Merrill Lynch, and has been quoted in publications such as The Wall Street Journal and Bloomberg News.

Apple's contract manufacturers are currently making iPhones at plants in southern India. However, production in the country is just beginning. According to Bloomberg Intelligence estimates, about 3 million of the devices were made in India in 2021, compared with 230 million in China.

Foxconn began making the iPhone 14 in India a few months ago, sooner than anticipated. The production rollout was surprisingly smooth, which slashed the lag between Chinese and Indian output from months to mere weeks. Apple’s three Taiwanese partners currently assemble iPhones 11 to 14 in India.

But moving Apple's production capacity out of China, where the company has built a deep supply chain over the past two decades, isn't easy. A Bloomberg Intelligence analysis estimated that it would take about eight years to move just 10% of Apple's production capacity out of China.

India tracks the production and exports of all smartphone makers who receive financial incentives as part of Modi’s push. This helps the government ensure that these companies are contributing to the country’s economy and creating jobs.

The country is looking to boost financial incentives for tablet and laptop makers in order to attract brands like Apple to produce more products locally. In 2023, Apple is expected to open its first retail store in India, provided it meets certain criteria imposed on foreign retailers.