Apple's India plans hit the Great Wall after Foxconn sends over 300 Chinese engineers home

The move to repatriate Chinese engineers back home is a challenge for Apple's India plans.

Apple’s ambitious plan to ramp up iPhone production in India is facing fresh hurdles, with Foxconn sending over 300 Chinese engineers and technicians back home from its India facilities, a move that sources say could hit the “speed of expansion” for the iPhone maker in one of its fastest-growing manufacturing bases.

The move will also disrupt production and export timelines for Apple’s upcoming iPhone 17 series, particularly the Pro line-up, which Foxconn is responsible for, sources said.

This development comes as China is also delaying or blocking the export of critical capital equipment essential for scaling Apple’s operations in India.

“Apple’s speed of scale-up will be impacted in India, which is a big problem. It is a government-to-government issue. MeitY was already informed about the issue, which started around two months back. Authorities are already aware of the issue…companies or industry stakeholders can’t be involved directly in this issue,” a highly placed source told Moneycontrol on condition of anonymity.

The industry has flagged both the repatriation of Foxconn’s Chinese staff from its factories in South India and the mounting disruptions tied to delays in capital equipment imports from China. These include tools and capital equipment essential for iPhone manufacturing.

The timing is critical. Foxconn, Apple’s biggest contract manufacturer in India, is expanding aggressively, with a large new facility in Bengaluru expected to begin operations soon. The site is key to Apple's iPhone export strategy from India. Foxconn is also reportedly adding 1,000 new local employees by mid-July, taking its India headcount to around 40,000.

Separately, Foxconn has begun producing Apple’s AirPods in Hyderabad for export markets.

A second source added that the staffing pullback could disrupt production and export timelines for Apple’s upcoming iPhone 17 series, particularly the Pro line-up, which Foxconn is responsible for. The Taiwanese manufacturer had already started trial production of the new models earlier this year. Tata Electronics is supporting trial runs for components such as metal casings.

Apple plans to unveil the iPhone 17 series globally in mid-September, and had been working to significantly scale up production of the high-demand Pro models in India, both to meet rising domestic demand and supply U.S. customers amid ongoing geopolitical uncertainty. The company is increasingly looking to India to fulfil most of its iPhone demand in the U.S. by 2026.

Taiwanese, Vietnamese workers may replace Chinese

“Foxconn is expected to bring in more Taiwanese and Vietnamese workers to replace those returning to China,” the second source said, adding, “There won’t be any major impact on Apple as they have the financial muscle. The bigger challenge remains capital equipment along with rare earth material for the company and for the industry at large.”

While China remains the primary hub for iPhone production, Foxconn has steadily expanded its footprint in India over the past few years. To accelerate this ramp-up, the company initially deployed a significant number of experienced Chinese engineers to its Indian facilities.

Foxconn has reportedly instructed its suppliers to modify specific machinery to make them compatible with English-language operations, as many of the current systems are configured in Chinese, Bloomberg reported on July 2. This retrofit is aimed at enabling Indian engineers and factory workers to operate the equipment more efficiently.

A third person flagged concerns beyond Apple. “Small manufacturers across the industry will face issues in India, and the electronics component scheme will suffer since Chinese executives will be needed for technology know-how and machine installations, especially for camera and display module categories where China has control over the ecosystem,” the person said.

Queries sent to Apple and Foxconn did not elicit a response.

Since early 2024, Chinese authorities have reportedly been discouraging the export of advanced manufacturing tools and technology to India, in what’s seen as a bid to slow the shift of global supply chains out of China.

Ploy to Thwart Make in India

“China has been trying all ploys to thwart the success of 'Make in India', which has over the past decade attracted OEMs worldwide to choose India as an alternative manufacturing destination. This attempt is another such step in the direction to sort of 'hijack' Make in India,” said Faisal Kawoosa, analyst at TechArc.

“While I do see such attempts only temporarily affecting the supply chain, we need to prepare counter-strategies as a country to balance the act. We need to show China how equally dependent they are on our consumer market. Still, the smartphone market is served more than 70% by Chinese smartphone OEMs,” Kawoosa added.

India has now emerged as a significant manufacturing hub for Apple, accounting for over 20% of the company's global iPhone production. With Apple aiming to manufacture the majority of iPhones for the U.S. market in India by the end of 2026, the stakes are high. Industry analysts estimate that to meet this goal, Apple will need to double its production value in India, from $22 billion in FY25 to over $40 billion.