Apple’s $2.5 billion iPhone shipments from India hint at a major manufacturing shift

Apple’s $2.5 billion iPhone shipments from India hint at a major manufacturing shift

Cupertino-based Apple has begun to benefit from its expansion to India.

Between April and December 2022, Apple exported more than $2.5 billion worth of iPhone handsets from the country, Bloomberg reported yesterday (Jan. 9). This was nearly double its shipments in the previous fiscal year. The company’s main manufacturers, Foxconn Technology Group and Wistron Corp, have exported over $1 billion worth of iPhone handsets each from India.

Apple’s handsets are manufactured in two main facilities in India in Sriperumbudur and Hosur, both in the southern state of Tamil Nadu.

This increase in the company’s exports now highlights Apple’s shift away from China, especially after the turmoil at Foxconn’s main plant there disrupted supplies in November. The Zhengzhou unit, also known as iPhone city, makes the high-end 14 Pro and Pro Max models.

Apple is worried over the possibility of a global recession, alongside China’s zero-covid policy. These factors have forced Apple, along with other global manufacturers, to look for alternative manufacturing bases.

India’s business-friendly policies for Apple

Apple began assembling iPhones in India in 2017, starting with its least expensive model, the iPhone SE.

In 2020, it began manufacturing the handsets locally after the Indian government launched its production-linked incentive (PLI) scheme. Foxconn alone has benefited by up to $44 million in the first year of PLI, according to Bloomberg. In the longer run, the scheme is expected to help India emerge as a manufacturing and export hub.

“Led by Foxconn and Pegatron, companies have already invested in factories, production lines, relatively advanced manufacturing processes, and personnel training in India,” Counterpoint Research analysts Ivan Lam and Shenghao Bai wrote in a note, accessed by The Times of India.

Apple is now preparing to open its first physical retail store in the country. Meanwhile, India is also looking to manufacture MacBooks and iPads.

Apple’s gradual shift to India comes at a time when China is seeing its workforce shrinkaccording to World Bank data. India’s highly-trained labour is relatively less expensive than those of China and the US.

Yet, moving out of China may not be easy. Bloomberg Intelligence estimates that it would take about eight years for Apple to shift 10% of its production capacity out of that country, considering 98% of the iPhones are made in China.

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