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The iPhone assembler is considering big expansion in India, a potential tipping point for the country
The postpandemic reshuffle of the world’s electronics supply chain is speeding up. At the center of the change: India and Apple AAPL -0.99%decrease; red down pointing triangle.
Apple supplier Hon Hai Precision Industry 2317 -1.44%decrease; red down pointing triangle, better known as Foxconn, plans to more than double its iPhone production at an existing plant near Chennai, India, to around 20 million units by 2024, The Wall Street Journal reported last week, and roughly triple the number of workers to as many as 100,000.
Foxconn is also planning an additional facility in the southern Karnataka state, according to people familiar with the matter. Foxconn has yet to publicly confirm the plans and didn’t respond to an emailed request for comment.
But if the world’s largest contract electronics manufacturer goes ahead with such a large expansion of its Indian iPhone assembly footprint, that will be a signal that India is rapidly moving into the electronics manufacturing big leagues.
And more investment in other, more complex electronics factories might not be too far behind. Foxconn plans to set up a chip-making facility in Gujarat in partnership with local company Vedanta.
Apple has been pushing its suppliers to diversify away from China in the wake of the Covid-19 lockdowns and unrest last year. And India, says Prachir Singh of tech and telecom consulting firm Counterpoint Research, has several obvious things going for it: local demand, a strong local talent pool, and aggressive government incentives for electronics manufacturers.
New Delhi has already earmarked billions of dollars in incentives to attract phone, semiconductor and electric-vehicle manufacturers to the country. India is also having some success moving up the value chain, albeit from a very low base.
Counterpoint reckons that the local share of total value added for mobile phones assembled in India rose to 15% in 2022 from 11% in 2019. The firm expects that to cross 20% in another two-three years.
Close to 6.3% of iPhones shipped globally in 2022 were manufactured in India, according data from tech consulting firm Canalys. Nearly all smartphones sold in India in the third quarter of last year were made locally, according to Counterpoint.
Still, a closer look at India’s electronics trade data shows how far the nation has to go if it hopes to rival China one day. India’s electronics exports grew 45% to $20.45 billion in 2022, while imports rose just 19%, figures from data provider CEIC show. But the country is still running a monthly electronics trade deficit of around $4 billion. And China exported about $30 billion of computers and mobile phones in December 2022 alone.
Moreover, in the electronic component space, progress is less obvious—India’s exports of components rose 29% in 2022 to $3.7 billion, while imports increased 26% to $27 billion. And many of those come from China.
Even so, the world’s second-most populous nation has obvious attractions for the labor-hungry Apple supply chain. Challenges such as often-inadequate infrastructure remain daunting. But a big vote of confidence from Foxconn could go a long way toward persuading other manufacturers to take a closer look too.
A Foxconn’s phone assembly plant in India. The company aims to assemble millions more iPhones in the country.PHOTO: KAREN DIAS/BLOOMBERG NEWS
Foxconn Signals India’s Arrival as Electronics Manufacturer
The iPhone assembler is considering a big expansion in India. A tipping point for the country as a heavyweight electronics hub might have finally arrived.
www.wsj.com
