Apple asks Foxconn to explore making iPhones in India

[itachii]

NEW DELHI: Will Apple make iPhones in India? That's what Prime Minister Narendra Modi is said to have asked Tim Cook when they met earlier this year, but the Apple chief executive officer seemed to be reluctant to make a commitment.

He might be reconsidering. Apple has sounded out one of its largest contract manufacturing partners, Foxconn Technology Group, to look at the possibility of making the iPhone in India in the next two to three years, according to two people with knowledge of the matter.

"There's definitely interest," said one of the two cited above. "When Tim Cook was here, the government raised the issue of making in India. It is after that that Apple started thinking of doing something in India which is long term."

Move to make devices cheaper

Local manufacturing would allow Apple to bring products to market quicker besides making them cheaper for Indian consumers and turning the country into an export hub, analysts said, while adding that this would require creating an elaborate and complex supply chain.

On his first visit to the country in May, Cook and Modi are said to have discussed manufacturing and retailing in India. Cook announced the setting up of an app development unit in Bengaluru and opened adevelopment centre for Apple Maps in Hyderabad, with an investment of $25 million.

Apple wants to open wholly owned stores in the country, which Cook sees as integral to winning customers by setting new service standards.

The second person aware of the details said Foxconn may take two to three years to begin making iPhones locally, the first step being assembling them in India. No timeline has been discussed, he said.

Apple, expected to launch the iPhone 7 on September 7, declined to comment, as did Foxconn. "Foxconn follows a strict company policy of not commenting on any matters related to current or potential customers, or any of their products," a Foxconn Technology Group spokesperson said in response to ET's query.

Need to boost India sales
Apple badly needs to boost sales in the world's fastest-growing smartphone market at a time US and China are slowing.

In recent years, Cook has repeatedly spoken of India as being a market where Apple sees great potential. "India is fast-growing, but our base there is smaller," Cook told the Washington Post in an interview last month.

"One of the big things that has held India back is the cellular infrastructure. They have two major carriers putting in a lot of investment to bring 4G."

The launch of 4G services by Reliance Jio Infocomm on Monday is expected to launch a new wave of demand for 4G devices but pricing will be critical in a market that's the second-largest after China in terms of the smartphone user base.

Another reason to go local is that India has started offering differential duty structures for companies making phones in the country, which means such devices will be cheaper than imports. "Tax benefit will remain one of the key drivers for setting up new base in India," said Anshul Gupta, research director at Gartner.

"Going forward, their volumes will also grow. The investment (they make) will get justified by the local consumption. They could possibly look at exporting to nearby markets... They're totally go-to-market centric with a single team looking at iPhones, iPad and Mac, so going local will only help them further."

Many challenges

However, making phones locally would come with certain challenges. Compared with indigenous brands manufacturing in India, Apple's plans would entail far higher investments, cutting edge technology required for making the high-end smartphones and a component ecosystem that is currently far more developed in China.

While local brands operate at volumes running into millions, Apple would operate at multiple times that scale as it would look at catering to multiple countries from India, not just the local market, said Vishal Tripathi, research director at Gartner India.

Apple had a 47 per cent share of the premium market segment — Rs 30,000 and up — in the quarter ended June, marginally trailing market leader Samsung, which had a 49 per cent share by volume, according to Counterpoint Research.

In the overall market, however, it has about a 2 per cent share, which pales in comparison with leader Samsung's 25.6 per cent share. In the past two quarters — January to June — 1.3 million units were shipped to India, 75 per cent higher than a year earlier.

Sales of iPhones in India rose 76 per cent in the quarter ended March, faster than most of its key markets, while revenue from local operations rose 38 per cent.

With Apple's growing popularity in India, there's speculation that it may reduce the lag between launch and sales start of the iPhone 7 in India, having shortened it last year for the 6s as well.

Read more at:
http://economictimes.indiatimes.com...ofinterest&utm_medium=text&utm_campaign=cppst

 

[itachii]

Apple Manufacturing iPhones Locally Would Be A Fascinating Test For The Indian Economy


The idea that Apple might or should produce iPhones locally inside the Indian economy has been long discussed. From our point of view here, thinking about economics, it would actually be a fascinating test of the abilities, the sophistication, of that Indian economy. For the question would be whether there would be the creation of a supply chain capable of meeting the volumes and standards that Apple requires. The answer isn’t clear cut which is why the idea, if it goes ahead, will be such a fascinating thing to observe. The results from Brazil show that it’s not an easy thing to create, such a supply chain.

There’s also a certain mordant humour to the idea. Over here in Europe everyone is shouting at Apple for the manner in which they dodge local taxation. And yet a decision to manufacture in India would at least partly be driven by the desire to dodge local taxation:

Price is also an important factor for Indian customers and should Apple begin to manufacture the iPhone in India, prices would get noticeably cheaper for customers. This is due to import taxes that are currently applied to the price of iPhones in the country. Because of this, iPhones made in India would theoretically be priced at a cheaper point than devices made by companies in other countries.

Completed phones are taxed on import into India. The import of components with which to complete phones are, largely, not taxed. So, there’s a price advantage to local assembly. At least, there’s a potential advantage to local assembly. It’s not in fact, at least not necessarily, true that assembling behind a tariff barrier is cheaper. Because it might well be that local assembly is more expensive, in and of itself. And whether the whole process is cheaper will depend upon whether the extra costs of the local work are lower than the tariffs being dodged. And we do in fact have an example of this – Apple has some assembly done in Brazil for exactly this reason. It’s not entirely perfect:


Foxconn has created only a small fraction of the 100,000 jobs that the government projected, and most of the work is in low-skill assembly. There is little sign that it has catalyzed Brazil’s technology sector or created much of a local supply chain.

The iPhones now rolling off an assembly line near São Paulo, the only ones in the world made outside China, carry a retail price tag of nearly $1,000 for a 32-gigabyte iPhone 5S without a contract – among the highest prices in the world and about twice what they sell for in the U.S.

I am about to employ hyperbole – there’s your trigger warning. Essentially, they’ve created a large shed within which they assemble imported components. And the actual assembly of an iPhone, in those Chinese factories, carries a labour bill of about $8 or so. Moving that activity to Brazil while importing all of the parts being assembled just doesn’t make much difference to the Brazilian economy at all – nor to the Chinese one either.


The question therefore isn’t whether the process can be done – we know very well that assembly can be done outside those Chinese factories. It may not be being done very well and it may not be something which, in the absence of tariffs, makes much sense. It’s also not something which makes very much economic difference to anything at all. There’s very little local added value. Just because assembly, qua assembly, doesn’t add much value. That in itself is something we should remember when talking about American manufacturing. The simple piecing together of these things, the “making” as some seem to think of it, just isn’t the high value part of the process. The chip manufacturing might be – but that’s done by Samsung in Texas anyway. The design part, the software writing, that’s done in California. The high value parts of this process are rather done in the US already. It’s the low value part, largely, which is done in China.

So, such simple assembly in India wouldn’t make all that much difference to anything. What would is if, unlike the Brazilian example, the move to local assembly sparked the creation of a local supply chain. And that’s the part which would make it a fascinating test:

Local manufacturing would allow Apple to bring products to market quicker besides making them cheaper for Indian consumers and turning the country into an export hub, analysts said, while adding that this would require creating an elaborate and complex supply chain.

That last is that important part. It’s only if there is such an elaborate and complex supply chain that there would in fact be any significant value being added in the Indian economy. We know that, in the Brazilian example, just bringing in the parts to assemble doesn’t do it. The question is, therefore, really this – is the Indian economy capable of producing to the scale and quality required? The answer there is that no one knows – Tim Cook doesn’t, Narendra Modi doesn’t and I don’t either. Which is why it’s such an interesting test of course.

At which point I can only offer an opinion – and I think I would retreat all the way back to Adam Smith to try and justify it. Brazil’s a rather more developed, richer, country than India (the two statements are the same statement of course). However, it’s also in terms of population very much smaller. Thus local production in India, in theory at least, could go rather deeper than that in Brazil. One the basis of the division and specialisation of labour.

Any factory producing parts for the iPhone is going to be, by definition, entirely world class. And to take a trivial example, is it worth building a world class factory to make microphones for iPhones to a population of 200 million, as in Brazil? Given that there is no such local supply chain we should probably assume not. Would it make sense to do so if supplying iPhones to a population of 1.2 billion, as in India? Maybe, perhaps – there’s obviously some number between 200 million and the 7 billion of the total global population where it does.

The actual decision will be different for each part of course. Tin to make solder is likely to continue to come from Indonesia, chips from Texas, software from California. Screens perhaps still from Japan – but at what point does it make sense to build a screen plant? Or a microphone, or speaker, or headphone jack (depending on whether those rumours about its existence into the future are valid or not) plant? The larger the potential market the more sense it would make to have that local plant, the further down the value chain local production would go.

That is, India could potentially be a sensible place to create very much more of the production and value chain than Brazil is. Which is again why I think it such an interesting question to ponder. Because whether it is in reality is going to be such a fascinating test of whether the Indian economy is, firstly, large enough to make those economies of scale work and secondly, whether there’s the local ability to in fact produce to the required volume and scale? If it’s just a shed assembling components then that’s of very little economic interest. If that supply chain gets created then that’s fascinating.

http://www.forbes.com/sites/timwors...ing-test-for-the-indian-economy/#2d8d7e596971

@PARIKRAMA @Nilgiri @Roybot @anant_s @Abingdonboy

 

[Abba_Dabba_Jabba]

With Apple planning to launch Iphone 7, lets get ready to see some of the so called "Brand" oriented and "living with high status" spoiled kidos getting ready to spent 70-75K INR for that phone, and Mr. Jobs(who btw rotting in hell) will be still laughing at some of this blind buyers.

On topic : Factories being built and shift from one part of the world to another just to exploit labour is part of American companies business ethics, India should look for some companies which are here to stay and ready to contribute something positive to the locals.

 

[CorporateAffairs]

NEW DELHI: Will Apple make iPhones in India? That's what Prime Minister Narendra Modi is said to have asked Tim Cook when they met earlier this year, but the Apple chief executive officer seemed to be reluctant to make a commitment.

He might be reconsidering. Apple has sounded out one of its largest contract manufacturing partners, Foxconn Technology Group, to look at the possibility of making the iPhone in India in the next two to three years, according to two people with knowledge of the matter.

"There's definitely interest," said one of the two cited above. "When Tim Cook was here, the government raised the issue of making in India. It is after that that Apple started thinking of doing something in India which is long term."

Move to make devices cheaper

Local manufacturing would allow Apple to bring products to market quicker besides making them cheaper for Indian consumers and turning the country into an export hub, analysts said, while adding that this would require creating an elaborate and complex supply chain.

On his first visit to the country in May, Cook and Modi are said to have discussed manufacturing and retailing in India. Cook announced the setting up of an app development unit in Bengaluru and opened adevelopment centre for Apple Maps in Hyderabad, with an investment of $25 million.

Apple wants to open wholly owned stores in the country, which Cook sees as integral to winning customers by setting new service standards.

The second person aware of the details said Foxconn may take two to three years to begin making iPhones locally, the first step being assembling them in India. No timeline has been discussed, he said.

Apple, expected to launch the iPhone 7 on September 7, declined to comment, as did Foxconn. "Foxconn follows a strict company policy of not commenting on any matters related to current or potential customers, or any of their products," a Foxconn Technology Group spokesperson said in response to ET's query.

Need to boost India sales
Apple badly needs to boost sales in the world's fastest-growing smartphone market at a time US and China are slowing.

In recent years, Cook has repeatedly spoken of India as being a market where Apple sees great potential. "India is fast-growing, but our base there is smaller," Cook told the Washington Post in an interview last month.

"One of the big things that has held India back is the cellular infrastructure. They have two major carriers putting in a lot of investment to bring 4G."

The launch of 4G services by Reliance Jio Infocomm on Monday is expected to launch a new wave of demand for 4G devices but pricing will be critical in a market that's the second-largest after China in terms of the smartphone user base.

Another reason to go local is that India has started offering differential duty structures for companies making phones in the country, which means such devices will be cheaper than imports. "Tax benefit will remain one of the key drivers for setting up new base in India," said Anshul Gupta, research director at Gartner.

"Going forward, their volumes will also grow. The investment (they make) will get justified by the local consumption. They could possibly look at exporting to nearby markets... They're totally go-to-market centric with a single team looking at iPhones, iPad and Mac, so going local will only help them further."

Many challenges

However, making phones locally would come with certain challenges. Compared with indigenous brands manufacturing in India, Apple's plans would entail far higher investments, cutting edge technology required for making the high-end smartphones and a component ecosystem that is currently far more developed in China.

While local brands operate at volumes running into millions, Apple would operate at multiple times that scale as it would look at catering to multiple countries from India, not just the local market, said Vishal Tripathi, research director at Gartner India.

Apple had a 47 per cent share of the premium market segment — Rs 30,000 and up — in the quarter ended June, marginally trailing market leader Samsung, which had a 49 per cent share by volume, according to Counterpoint Research.

In the overall market, however, it has about a 2 per cent share, which pales in comparison with leader Samsung's 25.6 per cent share. In the past two quarters — January to June — 1.3 million units were shipped to India, 75 per cent higher than a year earlier.

Sales of iPhones in India rose 76 per cent in the quarter ended March, faster than most of its key markets, while revenue from local operations rose 38 per cent.

With Apple's growing popularity in India, there's speculation that it may reduce the lag between launch and sales start of the iPhone 7 in India, having shortened it last year for the 6s as well.

Read more at:
http://economictimes.indiatimes.com...ofinterest&utm_medium=text&utm_campaign=cppst

MakeinIndia

 

[dray]

I can't really understand why people should buy a heavily overpriced, short-lived commodity like iPhone.

Besides, what is there to 'explore'? More than two dozen companies making phones in India, 70% of the smartphones sold in India are locally made, what is iPhone? Something Martian?

 

[somebozo]

i have tried a number of made in india NOKIA phones and they failed in six months...

 

[LOGICAL BOSSS]

i have tried a number of made in india NOKIA phones and they failed in six months...

Because a Pakistani was using them

 

[feilong]

Apple get ready to go bankrupt.

 

[A_Poster]

i have tried a number of made in india NOKIA phones and they failed in six months...

For someone who is convinced that Indian goods are inferior ,as a matter of faith, you seem to consume them a lot. Just a couple of week ago, you had an India made car which again failed you easily. It takes a lot of hard work for a Saudi to own so many "made-in-India" products. Some may even say that you are addicted

 

[Thorough Pro]

FOXCONN is going to make them in CPEC, why would they go to india?

 

[AnnoyingOrange]

Oppo and Micromax just finished their location survey in Noida, India to set up manufacturing facilities.

 

[kaykay]

With Apple planning to launch Iphone 7, lets get ready to see some of the so called "Brand" oriented and "living with high status" spoiled kidos getting ready to spent 70-75K INR for that phone, and Mr. Jobs(who btw rotting in hell) will be still laughing at some of this blind buyers.

On topic : Factories being built and shift from one part of the world to another just to exploit labour is part of American companies business ethics, India should look for some companies which are here to stay and ready to contribute something positive to the locals.

LOLz Booking is starting from today I guess in India at the price of 60000 rs. @Levina has already ordered...hai na?

 

[footmarks]

Everyone sitting around me in my office owns an iphone, while I own a oneplus x. Both are equally good looking and equally bad otherwise. Except that former is ridiculously over priced. There is no limit to foolishness if you have money to fool around

 

[Levina]

LOLz Booking is starting from today I guess in India at the price of 60000 rs. @Levina has already ordered...hai na?

Dekhoongi ...soochungi

My iPhone6 will celebrate his 2nd bday in Dec.

Btw I watched the first 1-1.5 hrs of iPhone 7 launch last night. I found the cameras to be too good, specially that of iPhone 7plus. The dual camera is as good as your DSLR they claim, with 10x magnifying capability and other such features. Should be helpful in recording videos of far away objects.

 

[LOGICAL BOSSS]

FOXCONN is going to make them in CPEC, why would they go to india?

Who Promised you ? China
If yes then get ready for many more heart breaks