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Saturday, September 26, 2020

Explained: Will local production help make Apple’s iPhones cheaper in India?

Apple started assembling phones in India in 2017. Now, its latest offering, the iPhone SE, is being assembled at Foxconn's Chennai plant. Will this help bring down prices for India customers?

Written by Nandagopal Rajan , Edited by Explained Desk | New Delhi | Updated: September 3, 2020 9:37:25 am
apple, apple iphone, iphone manufacturing in india, iphone india prices, iphone india, india apple iphone prices, iphone make in india, indian expressApple started assembling the iPhone SE at Foxconn’s Chennai plant in 2020.

Apple has started manufacturing its latest phone, the more affordable iPhone SE, in India. With this, the company now produces four models of the iPhones in India through its manufacturing partners Foxconn and Wistron.

When did Apple start making phones in India?

Apple started assembling phones in India with the original iPhone SE in 2017. The phone was then already a couple of years old, but still popular in India because of its lower price points. In 2018, it moved assembly of the iPhone 6s also to India. This was followed up by the iPhone 7 in 2019. All these units were manufactured by Wistron in its Bangalore plant.

Interestingly, like with the SE, the iPhone 6s and iPhone 7, were a couple of years old when their production moved to India. For Indian customers, older iPhones have traditionally offered a more affordable entry point in the Apple ecosystem.

In 2019, Apple’s partner Foxconn started assembling the iPhone XR at its plant in Chennai. This was a more recent phone and showed how Cupertino had started taking the Indian market more seriously.

In 2020, assembly of the latest iPhone 11 stared at Foxconn’s Chennai plant, followed by now the iPhone SE at Wistron’s plant in Karnataka. Both these are the latest offerings from the company.

Meanwhile, in 2019, Apple stopped production of the original iPhone SE and the iPhone 6s in India as the models were being eased out of sales.

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Will production in India bring down prices locally?

Apple usually has a global pricing strategy and that is seldom fine tuned for a local market, even where it produces hardware. There are also other reasons why prices won’t be impacted by local production. For one, the phones are only being assembled in India, and there is hardly any local sourcing of components. So, the cost of the production is not exactly coming down.

Second, Apple is still not capable of meeting the entire demand of a certain model with locally produced units. This means there will still be some imported units in the markets, and hence it would not be possible to sell Made in India units at a lower cost.

However, for locally assembled models, it is likely that Apple will be able to hold prices in case of a customs duty hike like the one affected earlier this year.

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Is Apple likely to move mode production outside China?

There have been reports that Apple is looking to move more manufacturing out of China because of pressure from the Donald Trump government as well as the impact of the pandemic. But it is unlikely that Apple will pull out of China entirely given the investment that has gone into setting up its production facilities there. But considering the units assembled in India are also exported to some markets too, there is a possibility Apple will start moving some production out of China to hedge for a situation where its entire production is impacted.

apple, apple iphone, iphone manufacturing in india, iphone india prices, iphone india, india apple iphone prices, iphone make in india, indian express Apple’s 3-million-square-foot manufacturing unit in Austin, Texas.

In 2019, Apple moved its production of its Mac Pro computers back to the US with a $1 billion, 3-million-square-foot campus in Austin, Texas. Apple and its manufacturing partners invested over $200 million in the Mac Pro facility, a release at the time said.

Interestingly, just this week, reports have emerged that the Taiwan-based Foxconn is among the companies looking to set up their production base in Mexico, catering primarily to the US market. However, it must be noted that Foxconn’s production is not exclusively for Apple and the facility could well be for other brands.

Earlier this month, Young Liu, Chairman of the Hon Hai Precision Industry Company, also known as Foxconn, said it was gradually “adding more capacity outside of China” — the ratio is already at 30 per cent of its overall manufacturing. “No matter if it’s India, Southeast Asia or the Americas, there will be a manufacturing ecosystem in each,” Liu said in the conference call, reported by Bloomberg, adding that while China will still play a key role in Foxconn’s manufacturing empire, the country’s “days as the world’s factory are done.”

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