Apple is actively working to build an ecosystem of Indian suppliers for components used in products like iPhones, MacBooks, iPads, and AirPods.
The US tech giant has engaged more than 40 Indian companies, including large conglomerates, IT firms, and electronics manufacturing service providers (EMS), in the project. It has roped in major tech companies like Dixon Technologies, Amber Electronics, HCLTech, Wipro, and Motherson Group.
Apple Inc is bullish on Indian partners as the Cupertino-based company’s Chinese component suppliers have been reluctant to invest significantly in India because of the ongoing tax and legal challenges Chinese smartphone companies are facing.
In the aftermath of the Galwan Valley clashes and escalating tension between India and China, along with the stricter FDI policies introduced under Press Note-3, several Chinese companies, including Apple vendors like BYD (for iPad manufacturing), were denied clearance to set up shops in India.
“The activity is on for some time at a larger level. Apple has a big team that has been discussing with Indian companies, including large conglomerates. They have met all large EMS companies in India, including Dixon and Amber. They are also talking to some global players,” a source familiar with Apple’s plans told Moneycontrol on condition of anonymity.
“Apple’s Chinese partners are not keen on coming to India due to existing cases against other Chinese companies in the electronics space. There are visa issues as well,” the source said.
Another source privy to the matter said Apple is working on the shortlisting its potential Indian partners. “Apple is evaluating which component can be sourced from which Indian company if it inducts them as partners. Although it will take some time, for instance, Aequs group took almost two years to move to the trial stage to be onboarded as an Apple supplier for MacBook enclosures and mechanical components for the Apple watch,” the second person said.
Apple is engaged with these Indian companies so that they could explore joint venture opportunities with Chinese, South Korean, Taiwanese and Japanese companies to produce key components like displays and camera modules locally.
“Apple is taking proactive steps ahead of the upcoming electronics components incentive scheme to enable Indian companies to onboard technology partners from other countries and swiftly benefit from the initiative,” said a third person aware of the plan.
“It is, however, difficult to shift to non-Chinese suppliers for Apple. Till 2020, everything that Apple was manufacturing was being done in China, including most parts of sourcing of components,” the person said.
The iPhone maker is looking to source crucial components from these companies owing to delayed government approvals for imports from existing China-based suppliers of batteries, camera lenses, chargers, and other components required for its products in India.
Queries sent to Apple, Dixon Technologies, Amber Electronics, HCLTech and Wipro didn't elicit any response.
Looking beyond iPhones
The discussions with the Indian companies reflect Apple's strategy to deepen its local manufacturing capabilities and work towards adding more products, such as AirPods, iPads, and MacBooks, to the made-in-India basket. However, it is starting to work with components of these products, instead of full product manufacturing.
Apple started manufacturing the iPhone 16 Pro and iPhone 16 Pro Max in India this year through its contract manufacturing partners Foxconn and Pegatron. The made-in-India iPhone 16 Pro and Pro Max are available for local customers and for export to select countries. Moneycontrol was the first to report on Apple's plan to expand manufacturing in India by starting production of the iPhone 16 Pro and Pro Max models.
Sources said the company is increasing the production of components for AirPod wireless charging cases through Jabil in Pune. Foxconn will start making AirPods next year at its new unit in Telangana.
Last year, Apple shifted part of its iPad production to Vietnam, but the Indian government is now urging Apple to reconsider assembling iPads in India, as Moneycontrol had reported on July 8. The government is also encouraging Apple to manufacture its entire product range locally in the coming years.
Beyond the central government's efforts, states like Telangana, Karnataka and Tamil Nadu are actively racing for a slice of Apple's future investments through existing and new component partners to boost local manufacturing.
India growth story
According to Apple India's regulatory filing, shared by Tofler, its net profit increased 23 percent to Rs 2,745.7 crore in 2023-24, driven by higher iPhone sales. The company's revenue surged 36 percent year-on-year to Rs 67,121.6 crore for the financial year ended March 2024.
The tech giant headquartered in Cupertino, California, has been achieving record quarterly sales in India since the beginning of 2023. With the latest results from the July-September quarter, Apple announced its 10th consecutive three-month period of year-on-year revenue growth.
From January to September, Apple shipped 9 million units, marking a 35 percent increase compared to last year. In the July to September quarter, Apple achieved record shipments of 4 million units, reflecting a remarkable year-on-year growth of 58.5 percent. According to IDC data, Apple held an 8.6% market share, positioning it as the sixth-largest player in the overall smartphone market.
The government's production-linked incentive (PLI) scheme has helped Apple significantly ramp up its manufacturing presence in India. Through Foxconn and Tata Electronics, which have taken over operations from Pegatron and Wistron, Apple has achieved a local value addition of 12-14 percent over the past three years, amounting to approximately $14 billion.
Sources indicate that Apple expects India's share of its production volume to rise to 17-18 percent and its share of production value to reach 14 percent by the end of FY25. This would result in a production value of $18 billion and a market value of around $27 billion.
Furthermore, Apple and its partners plan to assemble 32 percent of the global iPhone production volume and 26 percent of its production value in India by FY27, potentially generating over $34 billion in production value.
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