Apple Suppliers Plan Major Production Move to India

An unspecified Apple supplier is planning to move a significant amount of production operations to India, according to The Times of India.

The unnamed Apple contract manufacturer is expected to shift six production lines in total, with the aim of accommodating the export of $5 billion worth of devices from India. Establishment of a new facility for these new Indian production lines is expected to generate employment for around 55,000 workers over the period of a year. It will begin manufacturing iPhones, but may expand to other devices in the coming years.

Apple suppliers Wistron, Pegatron, Foxconn, and Samsung, are all expected to set up production facilities in India. These vendors are expected to be joined by Indian vendors Dixon Lava and Micromax in supplying Apple.

Foxconn announced last month that it was planning to invest as much as $1 billion in India, and has already established its first manufacturing plant in India. Last month, Apple started making iPhone 11 at the Foxconn plant in India. This was the first time a top-of-the-line model was been manufactured in the country.

Many companies are planning to diversify their supply chains in an effort to reduce dependence on China, which has come under increased scrutiny amid the global health crisis and trade war with the United States.

The Indian government has motivated production with the "production-linked incentive" (PLI) scheme, designed to attract companies with large-scale requirements for electronic components and semiconductors. The government has pledged up to six percent of costs of locally produced goods over the next five years. 22 companies from various countries, including Taiwan, South Korea, and Germany, have already applied to the PLI scheme. There have been no applications from Chinese companies. The scheme has already exceeded the government's manufacturing revenue target.

India is the second-largest smartphone market, but Apple has generally struggled to establish a substantial foothold in the country in the past. Apple almost entirely sells China-made devices‌ in India, but increasing local production would take advantage of the government's "Made in India" initiative, which could see Apple save as much as 22 percent on import duties and give it the option to reduce prices. Should Apple's supply chain expansion into India be successful, it may begin using the country as an "export hub."