- Foxconn’s iPhone production in India is less profitable than its facilities in China.
- The complicated supply chain of individual components in the country increases the production cost.
- Foxconn had also sent an engineering team from China to train Indian staff in manufacturing iPhones more efficiently.
Apple has been rapidly expanding its iPhone production in India, under its long-term vision to reduce its dependency on China. Foxconn, which is Apple’s largest manufacturer recently announced a $1.6 billion investment in India to double its workforce in the country. As of now, over 7% of the world’s total iPhone volume is produced in India.
While the growth of local manufacturing in India has been phenomenal, it is still nowhere close to China which contributes to 90% of Apple’s supply chain. And there’s a big reason behind this, as India’s efficiency in producing iPhones is far behind China. From higher production costs to cultural diversities between the two countries, here are all the challenges faced by Apple in its iPhone production in India.
iPhones Are Not Made in India, They Are Just Assembled Here
Apple currently has two partners in India to manufacture iPhones, Foxconn and Tata. While Foxconn has been a long-term partner of Apple, the Tata Group recently entered this business by acquiring Wistron’s facilities in the country. Hence, Foxconn has a slight edge over Tata given its experience in the segment.
As per a report from Rest of World, Foxconn’s iPhone production in India has been way less profitable as compared to its facilities in China. This is because of the complicated supply chain in India which results in higher material costs in production.
The harsh truth is that iPhones are not technically made in India, they are just assembled here. The majority of the core components such as the processor, display panel, and batteries are manufactured overseas and then imported in India. Most of these parts are made in China, and hence shipping these individual parts to India adds more cost compared to assembling them in China directly.
Although this sounds like a problem, it’s not that big of a deal as these added costs are eventually recovered by saving on import duty that would have been levied, if the iPhone was imported as a whole unit from China. The actual problem is the speed of manufacturing in India.
India Too Slow in Manufacturing as Compared to China
Rest of World’s report further mentions that Foxconn has not been able to replicate the speed on its facilities in China, to produce iPhones in India. In fact, earlier this year, Foxconn had sent some of its top workers from China to India to train Indian Engineers on manufacturing iPhones more efficiently.
Foxconn’s facilities in China demand longer working hours, shorter breaks during work shifts, and many other factors which result in a higher production speed. However, Foxconn has not been able to implement the same environment in India due to cultural differences.
Another major problem faced by Foxconn in India is the higher number of defective units during the production process. All these factors mean that manufacturing iPhones is far cheaper and faster in China, compared to India. However, Foxconn has not officially acknowledged these facts yet.
Despite the challenges faced in India, Foxconn is keen on expanding its production lines in the country due to external pressure from Apple. The US-based tech giant has been actively trying to find an alternative to China and has now considered India as its next big manufacturing hub.
The problems faced by Foxconn and Apple in India can only be solved when the actual internal parts start to be manufactured locally. However, the path towards manufacturing an iPhone entirely in India including the components is still a distant dream, as the country has not yet advanced in semiconductor and display production.
Unless players like TSMC and Samsung Display set up their own facilities in India, iPhone production in our country will keep facing challenges as compared to the ease of manufacturing in China.