Apple’s primary iPhone manufacturer, Foxconn, is contemplating a more sizable investment in India that would dramatically increase the volume of iPhones assembled in the second-most populated country in the world, according to a new report in The Wall Street Journal that follows previous reporting by Reuters.
The move, which would mark the first time Foxconn has made iPhones in India, could reduce Apple’s dependence on China for manufacturing its most popular device and potentially open new sales channels in India. Apple has previously contracted with Wistron Corp. to assemble the iPhone SE and iPhone 6S models in India, but Foxconn’s plans call for Apple’s flagship iPhones to be manufactured in India for the first time.
“With the notion that Apple is a higher-priced premium product, and that is how they are positioning it globally, it is a tough sell for the Indian market that has access to high-spec'd and much less expensive phones like those from Xiaomi and offerings from OnePlus,” Bill Ho, principal analyst at 556 Ventures, wrote in response to questions. “It's uncertain how much even with political tariff relief will help address this high volume and perhaps more price sensitive market.”
However, if Foxconn moved more manufacturing to India, the trade war between the U.S. and China would be mitigated, according to Ho. “If quality is consistent on new iPhones and costs drop, then consumers benefit for future models that should be competitively priced against Asian manufacturers. Either that can pad Apple's margins or a lower priced offering globally can increase upgrades, which drive further revenue.”
Senior executives from Foxconn plan to visit India next month to discuss plans, according to The Wall Street Journal. The manufacturing giant, which also makes smartphones for Xiaomi in India, is considering an investment of $356 million to expand iPhone production, which could create as many as 25,000 jobs, according to Reuters. Apple’s smartphone market share in India is hovering around 1%, so it has a lot of room to grow in the world’s fastest-growing economy.
“The China market to some extent is similar to India where not only Korean players can provide premium products but indigenous players Huawei, Xiaomi, Oppo and OnePlus do give Apple a run for the money in volume with better performing (spec-wise) products at a lower cost,” Ho wrote.
Apple recently cut its sales forecast for the first time in 15 years and blamed much of the guidance miss on lower-than-expected iPhone sales in China. Apple reports its full results from the end-of-year quarter on Jan. 29.