Apple's latest move creates $14B iPhone opportunity for Foxconn, Tata
What's the story
Apple is planning a strategic shift in its production and distribution, with a significant portion of India-manufactured iPhones set to be redirected from European nations, the UK, Turkey, and Japan to the US.
This move would create an economic opportunity valued between $12 billion and $14 billion for Foxconn and Tata Electronics in India, Moneycontrol reports.
Industry analysts predict that if this trend continues beyond the June quarter, India's iPhone production could potentially reach nearly $40 billion.
Production goals
Aim to meet 80% US demand with Indian production
Apple's strategy is to source most of its iPhones for the US market from Indian factories in Q2.
If it succeeds in its strategy, the company aims to eventually meet 80% of its US demand and fully cater to the local market, which is growing every quarter.
This is projected on the basis of April-June quarter of 2024, where over 11 million iPhones were sold at an average price of $1,100.
Production increase
Plans to increase iPhone production value in India
To meet its targets, Apple will have to raise its overall iPhone production value in India from the current $22 billion.
This would mean nearly doubling exports from $17.5 billion to anywhere between $32 and $35 billion, with the domestic market contributing around $5-8 billion.
In 2024, Apple produced some 40-45 million iPhones in India, contributing 18-20% to its global production.
Factory expansion
Apple partners expand capacities of Indian factories
Apple's partners are ramping up Indian factories and establishing new units.
Tata Electronics' new iPhone factory in Hosur has started operations, assembling older-generation iPhones.
Meanwhile, Foxconn's new Bengaluru facility, the second-largest facility outside China, is being established with a $2.8 billion investment and will soon start operations for iPhone production.
According to ICEA data, iPhones with ₹48,000 crore ($4.8 billion) free on board (FOB) value were exported in Q1 2024 v/s ₹28,500 crore ($2.85 billion) in same quarter last year.