BEIJING, November 3 (TMTPost)— Apple Inc. seems to step up moving part of iPhone production from the main manufacturing base China to India.

Credit：Ming Chi Kuo

If all goes well, the proportion of iPhones made in India will increase to 20% to 25% by 2024, up from 12% to 14% of global shipments this year, according to TF International Securities analyst Ming Chi Kuo, who was well known as the most accurate Apple analyst in the world. Owing to production expansion in India and Luxshare’s increase in iPhone order allocation and improvements in production line automation, accordingly, Foxconn’s output in two Chinese cities--Zhengzhou and Taiyuan is expected to decrease by 35%-45% and 75%-85%, respectively, over the next year, Kuo said in a recent note.

Kuo noted the new product introduction (NPI) for standard iPhone 17, which was set to be launched in 2025, will kick off in India in the second half of 2024. If the NPI effort were correct, that would be the first time for Apple to start development of a new iPhone model outside China. Kuo added that the reason that Apple chose the standard iPhone17 is to reduce design risk as such version is less difficult in design development.

Kuo highlighted Apple’s partnership with India’s largest conglomerate Tata Group.  With Tata as an iPhone assembler, Apple can strengthen its relationship with Indian government, and the work with Tata is helpful for sales of Apple’s products including iPhones in India, and is critical to the U.S. company’s growth in the next decade, according to Kuo.

Apple announced in April 2022 to commerce making iPhone 13 in India, which seems as one of signs to highlight increasing importance of countries like India, Vietnam and Mexico for suppliers who try to improve diversification of production away from China. Five months later, Apple confirmed it was assembling iPhone 14 in India, less than three weeks from its release of the new iPhone series. The confirmation effectively admitted India first made the latest flagship iPhone. 

Indian official has suggested Apple’s ambitious plan for production shift. Apple has already made about 5% to 7% of its production in India, and “If I am not mistaken, they are targeting to go up to 25% of their manufacturing, Piyush Goyal, the Commerce and Industry Minister, said in January. The minister cited Apple as a successful example to show foreign companies benefited from Indian government’s transparent policies and other efforts to attract foreign investors.

Apple seeks to make India a center to manufacture iPhones and accessories, Vietnam to assemble AirPods and Mac, Malaysia as a location for some Mac production, and Ireland to make a range of simpler products, according to tech reporter Mark Gurman. Apple employees have been instructed to focus on sourcing additional parts and local production lines beyond China for new offerings coming in 2024, but the company still plans to maintain existing operations in China, Gurman reported in April.

The value of India-made iPhones tripled to more than $7 billion in the fiscal year ended March, and most of it, about $5 billion, was exported, almost quadrupling export value in the previous year, Bloomberg reported in April. It was reported that Apple now makes nearly 7% of iPhones in India, up from just 1% in 2021. The report said Apple could assemble a quarter of all iPhones in India by 2025, if the aggressive expansion trend of its suppliers lasts. 

Apple plans to move at least 20% of iPhone production to India, Nikkei News reported in the beginning of August. The Japanese newspaper said Apple aims to manufacture 15 million iPhone units this year in India, including iPhone 15 series, and the output more than doubles its target a year earlier.

Quality, among others, is a major concern for Apple’s shift plan. Only about 50% of iPhone casings produced in a factory under Indian conglomerate Tata is good enough to be sent to assembly, and the 50% yield is well below Apple’s zero-defect goal, Financial Times reported in February. The factory in Hosur was reported to plan to improve proficiency but the road ahead is long.

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