In Short:
Apple’s contract manufacturer, Foxconn, has begun trial production of the iPhone 16 Pro and Pro Max models in Chennai, India, ahead of their September release. This shift aims to diversify production from China due to geopolitical tensions. Apple plans mass production in India by the end of the fiscal year, potentially fulfilling local demand first before exporting.
New Delhi: Apple’s contract manufacturer Foxconn (Hon Hai) has reportedly initiated trial production of the iPhone 16 Pro and Pro Max models at its facility in Chennai. These models are scheduled for release in September. Additionally, Apple has commenced pilot runs for the base models, with the aim of ramping up mass production in line with its global launch timeline.
As indicated by industry executives and an analysis of customs data reviewed by ET, Foxconn has imported components, including bare printed circuit boards, display assemblies, and camera modules for the Pro and Pro Max models, in small batches ranging from 500 to 1,000 units. This activity implies that a pilot phase is currently underway, according to the executives.
Historically, Apple has manufactured its top-end Pro models exclusively in China; however, the company is now seeking to diversify its production capabilities due to rising geopolitical tensions between Washington and Beijing. Apple did not respond to ET’s inquiries regarding this development.
Target for Mass Production
Insiders suggest that Apple aims for mass production of the Pro models in India by the end of the current fiscal year. The components cited in the customs data appear to have been imported in June, and experts believe additional parts were likely brought in during the previous months.
“Once pilot production proves successful, Apple is expected to move towards mass production of the Pro models in India. Manufacturers in India have already demonstrated their capability to produce base models concurrently with China last year. It is reasonable for Apple to increase its local manufacturing by including Pro models as well,” stated an anonymous industry executive.
Domestic Fulfillment and Export Considerations
It remains uncertain whether Apple will begin exporting the Pro models immediately from India. Experts suggest that the company will prioritize fulfilling local demand with domestically produced units, thereby passing on potential cost benefits to customers. Consequently, it is likely that the first batch of units available post-launch in September will be imported.
Significance for Indian Manufacturing
This initiative holds considerable importance for India’s manufacturing landscape, as production of the Pro models necessitates specialized assembly lines and advanced technical expertise. An industry executive remarked, “Apple’s decision to produce Pro models in India indicates that manufacturing capabilities in the country are progressing. There is an abundance of skilled labor available to meet these challenges and match China in quality.”
Currently, Apple produces most of its iPhones in China, while its manufacturing in India is supported by contract manufacturers, including Foxconn, Pegatron, and Tata Electronics, which has taken over Wistron’s production facilities in India and is recognized as an Apple supplier.
Contribution to Economic Growth
According to a recent Economic Survey, India accounts for 14% of Apple’s overall iPhone production, reinforcing its position as a crucial hub for global exports. In FY24, iPhones valued at ₹1.35 lakh crore were exported from India to markets in the Middle East, Europe, and the United States.
The surge in manufacturing has led to the creation of approximately 150,000 direct jobs since 2021, with Foxconn employing over 41,000 individuals at its Chennai facility.
Market Growth and Prospective Demand
Apple also views India as a pivotal growth market for its products and services. The company’s market share in India surged to 6% in the April-June quarter this year, up from just 2% in FY18, a change driven by the ongoing premiumization trend in the local market.
Market analysts predict that demand for the Pro models will see a notable increase this year compared to prior years, especially as Apple is anticipated to introduce generative AI-based applications in the upcoming products, thereby stimulating a replacement cycle.
“Apple likely expects stronger demand for its Pro models in India this time. Given local manufacturing and the PLI (Production-Linked Incentive) scheme incentives in place, the company may also pass on some cost savings to customers. Pro models tend to be priced higher in India due to taxes and duties compared to other markets,” commented an unnamed analyst.
