MUMBAI/NEW DELHI—Apple will begin assembling its top-end iPhones in India through the local unit of Foxconn as early as 2019, marking the first time the Taiwanese contract manufacturer will make the product in the country, according to a person familiar with the matter.
The move could help both Foxconn and Apple limit the effects of a trade war between the United States and China.
The U.S. administration has slapped tariffs on a total of $250 billion worth of Chinese goods; China has retaliated with tariffs on $60 billion worth of U.S. goods.
While most Apple products are manufactured in China, such as iPhones and Apple watches, they were spared from the U.S. tariff list. However, many electronic parts and components commonly found in electronic devices, such as motherboards and power supplies made in China, are listed.
Foxconn will assemble the most expensive iPhone models in India, such as devices in the flagship iPhone X family, the person said, potentially taking Apple’s business in the southeast Asian country to a new level.
The work will take place at Foxconn’s plant in Sriperumbudur town in the state of Tamil Nadu, said the person, who isn’t authorized to speak to the media and declined to be identified.
Foxconn will invest 25 billion Indian rupees ($356 million) to expand the plant, including investment in iPhone production, Tamil Nadu’s Industries Minister M C Sampath told Reuters.
The investment may create as many as 25,000 jobs, he added.
India’s daily newspaper The Hindu first reported Dec. 24 that the Foxconn plant would begin assembling various models of the iPhone. Reuters is first to report the size of the investment and the kind of phones to be assembled.
Lower-End Phones
Until now, Apple has only assembled the lower-cost SE and 6S models in India, through Taiwan-based Wistron Corp’s local unit in the Bengaluru technology hub. Its sales in India have also been focused on lower-end phones. More than half of its sales volume is driven by models older than the iPhone 8, launched last year, according to technology research firm Counterpoint.Apple launched the pricey iPhone X last year but has cut production of that phone, according to industry analysts, after it began selling the newer iPhone XS and XR globally this year.
Still, Apple could potentially get Foxconn to make the older iPhone X version in India, in a bid to get a bigger share of the world’s fastest-growing major mobile-phone market.
Full details of Apple’s deal with Foxconn aren’t yet clear and could change.
Looking Beyond China
For Apple, expanding its assembly capacity beyond China is critical to mitigating the risks of the Sino-U.S. trade war.Foxconn, the world’s biggest electronics contract manufacturer, is considering setting up a factory in Vietnam, Vietnamese state media reported this month. If that goes ahead, it will be one of the biggest recent steps by a major company to secure an additional production base outside of China.
Foxconn has also previously indicated that the China-U.S. trade spat is its biggest challenge and that its senior executives were making plans to counter the effects.
“Widening iPhone manufacturing in India through Foxconn will allow Apple to hedge the risk of any new U.S. trade policies,” said Navkendar Singh, an associate research director at International Data Corporation.
Indian import duties on devices and components have also heightened Apple’s headache in a market where it has only a 1 percent share, based on smartphone shipments.
Making more phones locally will help Apple save costly duties and boost Prime Minister Narendra Modi’s flagship drive to make India a manufacturing hub, Singh said.
Apple shocked investors last month with a lower-than-expected sales forecast for the Christmas quarter that jolted parts suppliers across the world.
