Apple Inc has started to ship iPhones manufactured in India to some European markets as the iconic smartphone maker looks to use India as its new export hub.
With the US and China locked in trade disputes, Apple now wants to reduce its dependence on China and restructure its supply chain.
Last month Apple asked its major suppliers to assess the cost implications of moving 15%-30% of their production capacity from China to Southeast Asia. Key iPhone assemblers Foxconn, Pegatron Corp, Wistron Corp, major MacBook maker Quanta Computer Inc, iPad maker Compal Electronics Inc, and AirPods makers Inventec Corp, Luxshare-ICT and Goertek were asked to carry out an evaluation.
Wistron Corp’s India arm, which first started assembling iPhones in the country in 2016, has become the first of Apple’s contract makers to export the smartphones from its facility in Bangalore, Economic Times reports.
The exports to Europe began a few months ago, and currently the volumes are about 70-80% of the total capacity at the facility. Wistron began making the iPhone 6 at its Bangalore facility last year and the iPhone 7 at the beginning of this year, the daily added.
Meanwhile, Foxconn is also expected to soon start trial production of the latest iPhones in India, following which it will begin full-scale assembly at its factory outside Chennai.
Apple’s move to use India as an export hub is expected to boost the country’s image as an attractive destination for foreign investment, both for its domestic market and exports.
Though India is the second-largest smartphone market in the world, it is also a price-sensitive one. Since Apple imports most of its components for iPhones, they attract heavy import duty and hence they are much more expensive than their Chinese and South Korean competitors, which have local manufacturing facilities. Due to this price factor, they have not been able to make much headway in the Indian market.
Once it scales up manufacturing in India, Apple can avoid import duties and sell its products at a lower price. This will also help Apple meet local sourcing norms that are a pre-requisite for opening its own stores in India.