Apple has been looking to avoid the heated trade war between China and the US by diversifying its supply chain and manufacturing, and its main partners are mostly focused on India as the prime spot for that transition. In time, that could lead to market share gains, as high import fees have kept iPhone prices out of reach even for middle-class Indians.
Foxconn and Wistron already have several factories in India that are tasked with building older generation iPhones for the local market and the EU. According to a Bloomberg report, Pegatron — who is the second-largest Apple contractor for iPhone manufacturing — is now looking to set up its first plant in the country.
At this point, it’s not clear where the new factory will be located, as company officials are currently exploring options with the Indian government. We only know that Pegatron recently registered a subsidiary in Chennai and intends to tackle production for the new iPhone SE, which is currently split 50-50 with Hon Hai (Foxconn).
Foxconn, too, is planning to invest $1 billion to expand its manufacturing capacity at its Sriperumbudur factory in southern India, 50 km from the factory that’s making iPhone XR units for the European market. That move will add an estimated 6,000 jobs for Indians in the coming years.
India is pushing hard to become a full-fledged manufacturing hub on the same level as China. Last month, the Indian government approved a $6.6 billion plan to lure Big Tech into shifting a big chunk of their production capabilities into the country, where labor is relatively cheap. As the US-China trade war rages on, companies like Apple are now scrambling to reduce their reliance on the Chinese supply chain.
For Indian Prime Minister Narendra Modi, who is in charge of the “Made in India” program, the ultimate goal is to gradually convince manufacturers to move their entire supply chain into the country. If all goes according to plan, India could be exporting $400 billion worth of consumer electronics per year by 2025.
In the meantime, the country has already seen a wave of investments from American tech giants. Most notably, Google and Facebook committed to investments of $4.5 billion and $5.7 billion, respectively, into India’s largest telecom provider, Reliance Jio Platforms. Even retailers like Walmart see potential in the country, with a $1.2 billion investment into e-commerce giant Flipkart.