Apple is making moves to shift large chunks of its iPhone production to India from China. According to the Indian Economic Times, the company is planning to produce $40 billion worth of iPhones over a span of five years via Taiwanese contract manufacturers Wistron and Foxconn.
While plans have been in motion since last year, the additional development comes on the heels of the coronavirus outbreak which disrupted tech company supply lines in China. The strategy will lessen Apple’s dependence on China as a base of operations.
“India isn’t a big market for Apple as the company sells only a fraction of its total output in India. It is actually looking at India as a base to manufacture and export, essentially diversifying its production out of China,” an official informed the Indian Economic Times.
According to the report, Apple currently sells $1.5 billion worth of smartphones in India as compared to its $220 billion worth of product sold in China where the company is the one of the top investors in the country. Apple directly and indirectly employs approximately 4.8 million people in China.
It’s safe to say India is hoping to stake out a larger portion of global exports. IDC, a market research firm, reported Apple held a 38% market share of global handset exports in 2018-2019. The closest competitor is Samsung is a 22% share.
Indian government officials are expecting companies to begin applying soon once guidelines for a production-linked incentive (PLI) scheme take effect August 1st. A source close to Apple’s plans has commented how the PLI scheme still needs work. “There are some problems with some of the clauses. For instance, valuing the entire plant and machinery already in use in its plants across China and other places at 40% of that value and the extent of the business information sought under the scheme are some of the irritants,” said the source.