Apple's India Manufacturing Dreams Face China Hurdle

Apple’s bid to expand its production in India seems to have been marred by significant headwinds such as geopolitical tensions, quality issues, lack of technology and labour issues. However, the biggest issue seems to be Chinese attempts to stonewall Apple’s India manufacturing dreams.

Sources told The Information that Chinese authorities, earlier this year, refused to allow one of Apple’s Chinese equipment suppliers to export machinery to India that the big tech major needed for the trial production of the upcoming iPhone 17.

As per the report, the vendor floated a “front company” in Southeast Asia to buy the machines, which were then sent to a Foxconn factory in India.

Inc42 has reached out to Apple for a comment on the development. The story will be updated based on the response.

This comes as Apple has been looking to aggressively shift a chunk of its production out of China, which still accounts for nearly 80% of total iPhone production. This diversification push has taken precedence amid rising geopolitical skirmishes between Beijing and Washington DC in recent months.

Earlier this month, the US government announced a 125% tariff on Chinese-made goods. While trading partners across the globe received a 90-day waiver earlier this month, the Donald Trump administration continued to keep China under the heavy tariff regime.

Due to factors such as this, , to move their production facilities to.

Why Are Tech Giants Making A Beeline For India?

Stumped by the tariffs announced by the US government, many tech companies are using the three month-long window to reassess their operations and diversify production to countries with lower tariffs to keep the costs of their products low.

India is emerging as a key base for these tech giants as the country currently attracts a reciprocal tariff of 10%, which is slated to increase to 27% post the 90 day-pause by the Trump administration – much better than tariffs imposed on manufacturing hubs like 125% and Vietnam (46%).

What works for India, unlike Vietnam and much to China’s chagrin, is its huge population and market potential that can support this manufacturing shift. On top of this, the Centre’s production-linked-incentives (PLIs) have also made it attractive for manufacturing companies to shift their base to the country.

Apple Caught Between Carrot And Stick In India

For Apple, . For context, the Cupertino-based company already assembles 30 Mn to 40 Mn iPhones in India every year, . So, India appears to be a natural contender for China’s position as Apple’s manufacturing hub.

Alongside, the big tech major has also reportedly “managed to influence policies making it easier for it to do business locally” as the centre is keen on developing the country as a manufacturing hub. What has helped it curry more favour with the government is its partnership, in recent years, with local conglomerate Tata Group to build iPhones in India.

However, the company seems to have its own share of challenges when it comes to India. Unlike its Chinese factories where employees work 12-hour shifts, Apple operates three separate eight-hour shifts at its India units in compliance with local labour laws. This means the company has had to hire a higher number of employees per shift in the country compared to China.

While it did manage to lobby the government to amend labour laws to permit 12-hour shifts, sources reportedly said that Apple’s manufacturing partners discovered that Indian workers didn’t want to work the longer shifts and eight-hour shifts continue to be the norm in India.

Then, there are quality issues. As per the report, Apple’s attempts to establish sub-assembly lines (the process involves the addition of metal brackets and screw holes to key components) in India in 2023 met with failure after those efforts fell short of Apple’s quality and cost goals. Eventually, the company moved the sub-assembly lines back to China, sources reportedly said.

Nevertheless, Apple continues to be wary of growing tensions between India and China and the impact of these developments on the iPhone maker’s supply chain.

The Dragon On The Prowl

Cognisant of Apple’s push for diversifying its production, the Chinese government has reportedly ramped up the scrutiny of exports of manufacturing equipment, such as high-precision lasers, air leak test stations and pick-and-place machines, to India.

Sources told The Information that Chinese authorities keep rejecting, delaying or blocking shipments of iPhone equipment to India without explanation. As per the report, Apple vendor Foxconn has seen approval times from Chinese authorities for exporting iPhone-making equipment to India rise from two weeks to four months.

In some cases, Chinese officials have reportedly also met with Apple’s supply chain partners to warn them against cutting manufacturing jobs in the country.

To address issues related to equipment exports, the big tech major has been mulling buying expensive equipment made by Japanese, South Korean and Taiwanese vendors, added the sources. But, that could reportedly take at least a year to test and approve.

Back home in India, the company’s vendors have built low-tech alternatives to deal with equipment delays from China by doing these automated tasks manually by hand instead.

While the jury is still out on how Apple’s India manufacturing gameplan will eventually pan out, many issues still need to be ironed out before the country can emerge as its production hub. However, if Apple is successful, India could reshape the global electronics supply chain and sit at the centre of global production.

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