Apple, the multinational smartphone manufacturer, after the pandemic came to a realisation that relying on a single country for critical components is a risky proposition. Ever since it has been making efforts to diversify supply chain away from China.
In doing so, Apple has turned its eyes to India and is now assembling its devices here.
As of August 17, ahead of its expected launch of the iPhone 15 series in mid-September, Apple has already commenced the process of assembling the handsets in India – a process that usually happens after the new iPhone is launched.
As per reports, iPhone supplier Foxconn has begun the production of iPhone 15 in Foxconn’s Sriperumbudur plant in India. The Pegatron and Wistron factory (now overtaken by Tata), located in South India will also soon begin assembling the iPhone 15.
Although over the years India has become a major hub in smartphone assembly, Apple still seems hesitant in entrusting the nation with its top models and is currently only assembling the base variants of iPhone 15.
In its diversification journey, we believe India to be a choice location for Apple to expand its assembling efforts and also include the top variant of the iPhone 15, namely the iPhone 15 Pro and iPhone 15 Pro Max. And, here’s why:
Enhancing Supply Chain Resilience
During the release of the iPhone 14 Pro, a surge in demand coincided with disruptions caused by the COVID-19 pandemic in China, where the devices were manufactured. This convergence resulted in significant shortages, leading Apple to incur losses exceeding $1 billion for each million units of the iPhone 14 or 14 Pro Max that couldn’t be shipped due to the supply shortfall. To prevent a recurrence of such a situation, diversifying assembly beyond China, such as in India, emerges as a prudent approach. India offers comparable cost structures and the potential to avert losses stemming from supply inadequacies.
Securing Technological Leadership
The upcoming models, iPhone 15 Pro and iPhone 15 Pro Max will be powered by the advanced A17 Bionic chips that are manufactured using the latest 3NM process. Opting for the assembly of these models in India would empower Apple to establish a robust supply chain for its most cutting-edge products. And, leverage the plethora of India’s skilled workforce in the technology and manufacturing sectors, which will further aid in the efficient assembly of complex electronic devices.
Mitigating US-China Chip Tensions
The US and China are currently in a Trade war. Amid this, the Biden administration has taken multiple actions to restrict the flow of key technologies and U.S. investment into China. In retaliation, China has also placed restrictions on the sale of some U.S. semiconductors. This has escalated concerns regarding the semiconductor supply, which can be a possible hindrance in the production of the iPhone’s upcoming series. It, however, can be avoided if Apple chooses to assemble its iPhone 15 Pro and iPhone 15 Pro Max models in India, Apple could diminish its reliance on Chinese-manufactured chips, thereby sidestepping entanglement in these tensions.
Despite these compelling rationales, reports indicate that Apple currently lacks immediate plans to initiate the iPhone 15 Pro assembly in India. Nonetheless, contemplating the potential challenges and advantages, such a strategic move could pave the way for Apple’s future accomplishments.
