Apple is considering a major shift in manufacturing capacity to India, with a possible shift of almost a fifth of its production capacity from China, if the report is correct.
Apple CEO Tim Cook visits India in 2016
Apple’s supply chain consists largely of the production and assembly of Asian-centric components, the vast majority taking place in or near China. Over the years, it has been suggested that Apple wants to diversify its supply chain to other countries, but a report on Monday suggests that India may be the greatest potential location for such migration.
Senior executives of the iPhone maker have apparently spoken with high-level government officials in India in recent months, reports the Economic Times. Discussions focused on the fact that Apple could potentially intensify its local manufacturing efforts in the country, with the possible goal of shifting about a fifth of its current Chinese production to India.
Report makers suggest that this could amount to $ 40 billion in local manufacturing revenue over the next five years, and could become Apple’s largest exporter to India.
“We expect Apple to produce up to $ 40 billion worth of smartphones, primarily for export through its contractors Wistron and Foxconn,” said an official, “enjoying the benefits of the plan. production incentive (PLI). ” The PLI program aims to encourage companies to encourage manufacturing in the region.
Another official said that India “is not a big market for Apple because the company only sells a fraction of its total production in India”, and that Apple actually considers the country “as a base for manufacturing and exporting, essentially diversifying its production outside of China. “
Apple aly does part of the manufacturing of iPhones in the country, although it is not currently sufficient to cover demand. Apple is said to sell iPhones worth around $ 1.5 billion a year in India, with a market share of between 2 and 3%, while the value of locally produced iPhones is less than 0 $ 5 billion.
To achieve what is proposed in the report, Apple should invest considerably in its production based in India, in particular by expanding its local supply chains. To take advantage of the benefits of the government’s PLI program, Apple should also produce at least $ 10 billion worth of iPhones in installments between 2020 and 2025, thereby meeting its annual targets.
Once the objective is reached, the real incentive will be between 4% and 6% of additional sales in a base year of products produced in the country.