Foxconn India factory reportedly seeking expansion to meet local iPhone demand

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On the countrymeters.info statistics website, the number on the India Population clock has come to 1.413 billion.

This figure is just based on India’s birth rate and death rate, which is constantly updated in real time. The number of 1.413 billion may not be accurate, but it still cannot stop India’s progress toward the world’s most populous country.

The rising population has brought a “demographic dividend” to India’s economic growth, and it has also nurtured a market that may have strong purchasing power.

Such a potential market has naturally become a battleground for mobile phone manufacturers. A few years ago, when domestic mobile phones went abroad one after another, the first markets they wanted to conquer were the Indian and Southeast Asian markets.

iPhone not selling in India

Over time, many manufacturers have found the key to success in the Indian market. According to IDC data, among the top five mobile phone manufacturers in India in terms of market share in 2021, domestic brands will occupy four seats, almost eating up 70% of the market share.

This is a bit similar to the Chinese mobile phone market, but also a bit different. Similar is that orange, blue and green are the market leaders. The difference is that the iPhone has lost out to India and ranked among the others.

According to CyberMedia Research, Apple will only ship 5.4 million units in 2021, accounting for a 4.4% market share. For comparison, Xiaomi shipped more than 40 million units in the same year.

In fact, Apple’s situation is not because it does not value the Indian market. Earlier in 2016, when Tim Cook went to India, he said that Apple would stay in this country for “a thousand years”.

In 2018, many executives of Apple’s India sales team resigned one after another, and the reason was not unrelated to the sluggish iPhone sales in India.

Since then, Apple has reorganized its sales team and launched an online store in India in September 2020. It is also planning to open India’s first Apple Store on a bustling commercial street in Mumbai.

The same is CyberMedia Research, they are quite optimistic about Apple’s future performance in India, and predict that its market share will increase to 5.5% in 2022, and shipments will reach 7.5 million units.

Part of the reason for this prediction is the release of the iPhone SE 2022 and the popularity of the iPhone 13 in India; part of the reason is that the Indian high-end mobile phone market is growing rapidly, in other words, the Indian middle class is growing.

At the same time, India’s high-end mobile phone market is also growing rapidly, with a year-on-year growth of 90% in 2021. One in every eight smartphones sold in 2021 will be a premium smartphone.

The Indian iPhone 13 is here

Not only the layout of the Apple Store, but a few days ago, Apple officially announced that it has officially started production of the iPhone 13 in India. This is the fourth iPhone assembled in India after the production of the iPhone SE in 2017.

It is also OEM by Hon Hai Foxconn. The factory is located near Chennai, India. The iPhone 13 is not exported for the time being, but only sold to India. At the same time, Pegatron also plans to start assembling the iPhone 12 in its local factory in India in the near future, and it will also be temporarily self-produced and sold.

From this, Apple, which had previously lost India, is preparing to start a new round of charging.

The Indian mobile phone market has huge potential, but the purchasing power is slightly insufficient. The price of iPhone has always been high, which is actually a big reason for Apple’s poor performance before.

In 2020, Apple has lowered the price of the iPhone 12 to 34,999 Indian rupees (about 3,000 yuan), with additional discounts. At the same time, the retail price of the iPhone SE 2020 has also been reduced to 27,999 Indian rupees (about 2,300 yuan).

A solid discount, making the iPhone 12 the best-selling iPhone in India in one fell swoop. And the iPhone 13 is repeating this process and momentum. According to BusinessToday’s interviews with Mahesh Telcom dealers in Mumbai, the iPhone 13 is gaining popularity, mainly because dealers are offering additional incentives.

It seems that if you want to occupy the market, you have to rely on price reduction.

The same is the demographic dividend, and the lower manufacturing population cost is also a significant advantage. It is also based on this that in the past few years, Samsung and Foxconn electronics manufacturers have also begun to build factories in India, which naturally includes Chinese manufacturers who have achieved results in India.

Including the recent Apple, its cheap labor is one of the reasons for moving factories to India. Naturally, it is not ruled out that the iPhone 13 produced and sold in India will have special sales promotions to promote sales.

Grinding import duties and new incentives

However, there is actually a policy reason for changing to localized assembly production.

One of the goals of Narendra Modi’s “Make in India” initiative in September 2014 is to make India a global smartphone and PC manufacturing hub.

In addition to encouraging local Indian companies, the import tax on the consumer electronics industry and even the entire industry has also been gradually increased and expanded, from 10% to 20%. Recently, Modi has targeted some mobile phone parts (such as camera modules) with tariffs, which increased slightly from 0% to 2.5%.

Previously, Apple had been negotiating with the Indian government, trying to lobby the plan to delay the increase in the import tax on parts. However, the Indian government was not active and did not open a back door to Apple.

However, under the “Made in India” plan, some local mobile phone manufacturers in India are still struggling.

Ironically, after many years of manufacturing in India, the big fish in the final market are still foreign manufacturers. The larger foundries are also foreign Samsung and Foxconn. Manufacturing in India is more like a basic assembly work, and some parts still need to be imported on a large scale.

This time, the Indian government’s adjustment of import taxes must also be based on the current unhealthy status quo. When the tariff stick is hit, it will naturally give chewing gum.

India has approved a $10 billion incentive package to lure big semiconductor makers to India as a production base and to try to make the country a global hub for chip design and manufacturing.

According to Bloomberg, Indian Information and Technology Minister Ashwini Vaishnaw believes that after India opens this incentive policy, there will be 10 to 12 semiconductor manufacturers set up factories in India in the future.

Including Apple’s foundry Hon Hai, Israel’s Tower Semiconductor has indicated that it may set up a semiconductor factory in India.

Apple has previously invested in helping Wistron to open a factory in India. This time, the Indian production of the iPhone 13 may also value a new round of incentive plans, so that it can negotiate with the Indian government to resolve the issue of additional import taxes on components.

The Wall Street Journal reported that during Cook’s visit to India, he thought “India is different from other countries, and we have to treat it differently.” This is actually similar to the principle of “learning from the Chinese market to add dual-card dual standby to the iPhone”.

However, in the process of exploring the Indian market, Apple still hopes to open factories to increase jobs, hoping to gain many policy inclinations from India, but this has not moved the Indian government.

The Indian government still wants to expand localization of production, not just assembly. The production of the iPhone 13 may mean that Apple has once again “compromised” on this special market in India. As for whether it can continue to expand its market share with the help of the iPhone 13, it may ultimately be the simplest and most direct factor, which is how many discounts it can bring.

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• 2022-04-19Foxconn India factory is reported to seek expansion to meet local iPhone demand
• 2022-04-11Apple starts production of iPhone 13 in India
• 2022-03-14It is reported that Foxconn’s Indian factory will mass-produce iPhone 13 in April
• 2021-12-21The iPhone 13 will be trial-produced at the Foxconn factory in Chennai, India, and it is expected to be mass-produced in February next year
• 2020-07-27 iPhone 11 will start production in India, Apple accelerates its departure from China

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