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Plan 2021: Apple looking to make iPad, AirPod, MacBook in India; increasing local sourcing for iPhones



New Recruit

Jul 18, 2014
NEW DELHI: Apple is working on deepening its manufacturing capabilities in India by increasing local sourcing of components for iPhones besides bringing its partners to kick off local production of iPads, Airpods and MacBooks, people familiar with the matter told ET. They added that there has been no change in the company’s plans despite the recent violence at the Wistron plant.

“Apple is looking to increase local value addition to its iPhones in India. They are currently exploring how more of its global suppliers can come to India,” one person said.

A second person added that the company is also exploring possible business with Indian companies that are either new or are already working in the handset component space.

Besides its smartphone component suppliers, a third person said that some of Apple’s other manufacturing partners are also finalising their plans to set up India operations, say people familiar. Some of these are Avary Holding (Shenzhen) for flexible PCB, BYD Electronics for iPad, Luxshare Precision Industry Co for Airpods, Quanta Computer Incorporated for MacBooks and AT&S for PCB.

"Many of them have registered companies in India, while others are in the process. There are some smaller partners as well who may enter India starting next year," a third person said.

Navkendar Singh, research director at IDC said that local sourcing has to be a pivotal part of Apple's strategy for next few years. “It is clear that India is an important market for Apple and it must use all government initiatives and policies to make India as its next big manufacturing and exports hub."

He added that display panels, battery, outer casing etc could be among initial focus areas for the premium smartphone major, which is in the process of shifting a bulk of its manufacturing to India from other locations such as China.

In fact, some of the key suppliers of Apple iPhone-makers—Foxconn, Wistron and Pegatron—are already in touch with the government to participate in the second round of applications that India is set to invite under the production-linked incentive (PLI) scheme, specially directed to attract electronics component makers, for sops worth Rs 2,000 crore over five years, ET reported recently.

Apple India didn't respond to ET's mailed queries.

In India, the company already works with Shenzhen YUTO Packaging Technology Co Ltd, Sunwoda Electronic Co Ltd, CCL Design (Suzhou) Co Ltd, SABIC Innovative Plastics and Salcomp Plc to source various components and for packaging in India.

Cheng Uei Precision Industry Co, a Taiwan-based cable and connector maker, is likely to start mass production for Apple Inc next year from its new plant in India. The cable supplier, which is an affiliate of US-based Foxlink, hasn’t yet been listed as a supplier in India by Apple.

Apple could rope in more partners for sub assembly, testing and packaging besides other components players for local sourcing, the first person said. The second person added that besides its own global suppliers setting up shop in the country, the company is also exploring possible business with Indian companies that are either new or are already working in the handset component space.

Tata group, for instance, may emerge as a key Apple partner in India with plans of an electronics component factory in Tamil Nadu, which will manufacture iPhone casings, among other components, ET recently reported. Group company Tata Electronics may invest Rs 7,000 crore under the government’s Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), which has a budget outlay of Rs 3,285 crore spread over a period of eight years.

“We believe that the local value addition will be a phased process… as component suppliers set up their factories in India. Currently, local sourcing for Apple is not high,” Prachir Singh, senior research analyst at Counterpoint Research, said. He added that some of the components that are locally sourced by Apple are batteries and chargers.

The second person quoted above said that India’s component manufacturing landscape is fast improving with various suppliers starting their operations in the country. “Most of these are suppliers of Oppo, Xiaomi and Vivo… Some Indian players are also joining the ecosystem.”

Recently, local electronics parts maker Sahasra earmarked an investment of Rs 350 crore over the next four years for assembling mobile phone memory chipsets, laptop hard drives and motherboards in India. It is aiming to scale up to 100 million integrated circuit (IC) units annually for memory, and is in talks with players like Foxconn, Wistron, Lava, Dixon, Micromax and Reliance Jio for supplying memory chipsets.

Apple has been expanding its manufacturing operations in India aggressively. All three of its contract manufacturers—Foxconn, Wistron, and Pegatron—have been approved for getting government sops under the production-linked incentive (PLI) scheme. However, both Wistron and Pegatron are currently on probation over labour practice lapses.


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