Monday, May 20, 2024

“Apple’s future depends on India for 10 years”

REUTERS

India is also emerging as a consumer market beyond Apple’s production base. According to a report released by market research firm Counterpoint Research at the end of January, the number of iPhone sales in India exceeded 10 million units for the first time in history. Although it has not reached the level of Chinese companies such as Samsung Electronics, which is still No. 1 ranking, Xiaomi, and Oppo, India is serving as a new breakthrough for Apple, which is struggling in the Chinese market. “Apple surpassed 10 million units a year in the Indian market for the first time thanks to strong demand for the latest and old models,” Counterpoint Research said. “The opening of its own retail stores and sales promotion programs have had a great effect.” “India has emerged as one of the top five consumer markets for the iPhone, beating France and Germany last year. India will be the key to Apple’s growth over the next 10 years,” said Kuo Ming-chi, an analyst at TF Securities in Taiwan who is an expert in Apple’s analysis. From Apple’s point of view, there are many barriers to overcome to expand production in India. Indian engineers are not skilled and workers are not motivated to work, so the biggest problem is that they do not have as high productivity as Foxconn’s factory in China. Foxconn has deployed a large number of engineers from its Foxconn factory in China to India to boost productivity and engineers’ skills in the local iPhone production line. Just as Korean engineers were training Chinese engineers in the past, Chinese engineers are training Indian engineers. There is a Foxconn factory with 35,000 employees in Seonjeobachatram, not far from Sriperumbudur, where hundreds of Chinese engineers reside. With their help, the factory succeeded in producing iPhone 15 products in India, which were just announced in September last year. The defect rate is said to have fallen to the level of Chinese factories. Apple has established a system that can produce new products simultaneously in China and India. In the past, production bases in India mainly produced old and low-cost models that were a generation away, but last year, the latest iPhone 15, also began to be produced in earnest. Apple plans to develop the standard iPhone 17 model to be released in the second half of 2025 in India and hold a new product presentation. Apple plans to move not only the iPhone assembly plant but also the supply chain of parts such as batteries to India. Apple is seeking to build a new factory in India at Apple’s request, France’s international radio station RFI reported late last year. Apple is said to plan to supply batteries for its products starting with its next production of iPhone 16. Not only assembling finished products but also supplying parts and components such as batteries has started the process of de-Chinaization. India is notorious for its cumbersome administrative procedures, high tariffs, and lack of infrastructure. However, it has been providing support to expand production of iPhones in India and build supply chains. The Tamil Nadu state government accepted Foxconn’s request and significantly eased labor regulations. The daily limit of working hours has been increased to 12 hours, enabling up to four hours of overtime work, and is also preparing laws and regulations for large companies that hire hundreds of thousands of people, according to Indian media including Economic Times. In late January, the Indian government also decided to cut tariffs on various parts and components for mobile phones from 15 percent to 10 percent. India imports many parts from China and Vietnam due to lack of supply chain, but lowered the tariff when it was pointed out that higher tariffs are burdensome compared to other countries. It seems to be intended to increase the price competitiveness of iPhone products produced in India by lowering the tariff rate higher than that of competitors such as China, Vietnam, and Mexico.

EJ SONG

US ASIA JOURNAL

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