25 Percent of Apple Products will be Produced in India, Indonesia How?
iPhone 14 is Apple’s newest product to be made in India. The decision was taken because it sees India as the second largest smartphone market in the world after China.
The iPhone 14 is not Apple’s first product to be manufactured in India. Previously there were several products made there, such as the iPhone SE, iPhone 12, and iPhone 13.
Apple, headquartered in Cupertino, California, United States, began producing iPhones in India in 2017. iPhone SE became the first product to be made entirely in Bollywood.
iPhone 14, which was launched earlier this month, became a product smartphone Apple’s latest to be manufactured in India. There are four models launched, namely the iPhone 14, iPhone 14 Plus, 14 Pro, and 14 Pro Max.
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According to sources at the company, the iPhone 14 ‘Made in India’ will start reaching local customers in the next few days. Mobile phones manufactured in India will be marketed to the local Indian market and also exported.
The Indian-made iPhone 14 will be shipped from Foxconn’s Sriperumbudur assembly plant on the outskirts of Chennai, India. Foxconn is the world’s largest electronics manufacturer, and is a major iPhone assembly plant.
When contacted, Apple said in a statement to PTI: “We are delighted to be producing the iPhone 14 in India.” “The new iPhone 14 lineup introduces innovative new technologies and critical security capabilities,” he said.
“We are delighted to be producing the iPhone 14 in India. The newly launched iPhone 14 series introduces innovative technology and critical security,” said Apple.
iPhone 14 was launched on September 7, 2022, and has been available to customers in India, the US and simultaneously in several other countries since September 16, 2022.
Apple has a long history in India, which started more than 20 years ago. Apple launched its online store in the country in September 2020, and said it will continue to add Apple retail stores in India for the next few years.
The recent expansion of iPhone manufacturing in India builds on several Apple initiatives in the country, including the App Design and Development Accelerator in Bengaluru and a program with local organizations to support training and development of renewable energy for the community.
The dynamic Indian market is turning into “sweetspot” for the US tech giant. As the country with the second largest population in the world, India is a sexy market for Apple. According to the latest financial reports, Apple’s revenue nearly doubled in the country in the second quarter ending June 2022.
“We made record revenue in June 2022 in the US, Europe and Asia Pacific. We’re also setting records in both developed and emerging markets,” said Apple CEO Tim Cook.
Tim Cook said that there was strong double-digit growth in Brazil, Indonesia and Vietnam. Meanwhile, Apple’s revenue in India has almost doubled.
A recent report by JP Morgan on ‘Apple’s Supply Chain Relocation’ estimates that Apple “is likely to move about 5 percent of iPhone 14 production to India from late 2022 and reach 25 percent by 2025”.
A report recently released by JP Morgan, estimates that Apple will likely move five percent of iPhone 14 production to India. It is also estimated that nearly 25 percent of all Apple products, will be manufactured outside China by 2025 compared to five percent today.
“US-China trade tensions began a cycle of production relocation and the search for a ‘China+1’ manufacturing approach, for Apple’s supply chain starting in late 2018,” the JP Morgan report said.
The Covid-19 pandemic has put a brake on this relocation process for the past two years. But with fears of the pandemic easing, many companies in Apple’s supply chain are accelerating their supply chain relocation efforts, including in India.
“Supply chain risks (such as lockdown related to Covid-19 in Shanghai/Shenzhen) is likely to be the main driving force for this movement in the next two to three years,” he added.
Southeast and South Asian countries, such as India, Vietnam, Thailand, have become the preferred locations for geopolitical diversification from China for Apple supply chain vendors.
According to JP Morgan analysts, this is given the lower labor costs in these countries, adequate support for skilled labor, and attractive government policies and support to investors.
While the smartphone market is growing rapidly, it has made India like a “sexy girl” in the eyes of investors. In addition, the New Delhi government’s policies in the electronics sector have encouraged large global suppliers to expand in India, and encouraged new players to establish production bases in the country.
Having tasted success in manufacturing smartphone locally, India is moving quickly to emulate success with other parts of the electronics ecosystem, as it makes solid efforts to reduce dependence on imports.
The Indian government has launched attractive incentives to spur local production and exports of telecommunications and networking equipment and IT products, and a Rs 76,000 crore semiconductor scheme was announced late last year to increase production of locally made display chips and panels.
To attract global tech giants, such as Intel and TSMC, the Indian government last week made its latest semiconductor package more attractive, increasing fiscal support for new facilities across technology nodes to cover 50 percent of project costs.
Indonesia should imitate India
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Indonesia seems to have to reflect on India which has successfully worked on its domestic market by attracting many foreign investors who want to invest in the country.
Former General Advisor to the United States Institute for International Development (USAID), John Gardner explained the obstacles for US companies to invest in Indonesia.
Gardner said that US companies had difficulty investing in Indonesia because there were many regulations in the government that investors had to go through in order to get permission to invest.
“The data shows that regulations in Indonesia do not support US companies to invest in Indonesia,” said Gardner, as quoted from Kontan.co.id.
He said, based on USAID research, there are about 15,000 ministerial-level regulations related to investment, and 95% of them were only passed in 2010.
Apart from the central government, Gardner also touched on the barriers to investors arising from local government regulations (Pemda).
“Some local government regulations can be very dangerous to attracting foreign investment (FDI),” Gardner said.
If that’s the case, Indonesia will eventually only become a market for world producers to sell their products here. Indonesia should be able to imitate India which makes it easier for investors to invest in Indonesia. [SN/HBS]
