Apple To Start Making iPhones In India, Says State Government

vasanth quotes a report from BBC: Apple is to start making iPhones in the southern Indian state of Karnataka, the state's government has said. Ministers said Apple would start an initial manufacturing operation in the state, whose capital is the tech hub Bangalore, in April. The tech giant has a 2% share of India's mobile phone market, well behind South Korean rival Samsung. Apple has yet to officially confirm the plan, saying only that it is keen to "invest significantly" in India. But Priyank Kharge, minister of information technology and biotechnology in Karnataka, told the AFP news agency: "We have an understanding with Apple and we expect them to start manufacturing in Karnataka by the end of April." Reports said the plant is being set up by Taiwanese manufacturing company Wistron Corp. Apple has held a series of meetings with government representatives at both state and national level and is understood to be pressing for concessions before going ahead with such a move. Apple is currently unable to set up its own branded stores in India, which has a raft of rules to curb the activities of foreign companies. For it to be able to sell direct to customers in India, Apple would have to source 30% of the components of its products locally. Priyank Kharge, IT minister for the Indian state of Karnataka, said Thursday on Twitter: "Apple's intentions to make iPhones in Bengaluru will foster cutting-edge technology ecosystem [and] supply chain development in the state."

Re:

[Anonymous Coward]

An alternative fact is that Apple is making all of its products in the USA and creating thousands of jobs. GO TRUMP!

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[jrmcferren]

Manufacturing in India doesn't mean they can't use the Chinese factories for Asian Market or to build a US factory for the North American market.

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[s122604]

The better, or dear leader is going to be very unhappy.

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[currently_awake]

The purpose of building outside the USA is to lower costs. India is cheaper than China, they just lack the infrastructure required for this. If they can get Trump to pay for the infrastructure in India then it works. India, Indiana, it's an American state, right?

There Goes the QA...

[oh_my_080980980]

"And by getting Apple to set up in Karnataka, he hopes says it should help promote to region's ambition to become a location for high-end manufacturing." http://www.bbc.com/news/busine... [bbc.com]

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[unixisc]

If they are building them just for India, why do their QA levels have to be the same as that in the US?

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[unixisc]

In fact, iPhones had the same marketshare as the Lumia. In fact, in India, when apps are advertized, one sees as many that are available on Windows Phone as are on Android or iOS

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[dgatwood]

Do Indian companies make any components that could go into an iPhone? Last I heard, there weren't any fabs in India, which probably means there aren't any SMT parts makers, either. I mean, I suppose they could mill the enclosures, fabricate the PCBs, and mould the Gorilla Glass, and maybe say that it is 30% by weight, but I don't think that's what they mean. The best they could do is "source" the parts from an Indian company that then imports them from China/Japan/Taiwan, but I fail to see how that's go

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[ghoul]

India does have fabs just not the latest ones which can make CPUs. There are many fabs making chips for televisions, radios and phones. Most of the surrounding chipset can be locally sourced with maybe the touchscreen, CPU and battery being imported. Also the example of Maruti (Suzuki India) shows that once the final assembly moves to India the part manfacturers also move lines to be near the final assembly. It even saves on transport costs for Apple for phones to be sold in Indian Subcontinent or Africa as

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[currently_awake]

American companies are very good at "Creative Accounting" to make gorilla glass + enclosure make up 50% of the cost of the phone, thereby "Product of India" achieved. The latest Intel fab will use smaller geometries, so new fab needed. May as well get it out of "Ground Zero" of a China/Taiwan war at the same time. China is getting expensive, it's time to move.

skeptical

[supernova87a]

I do not believe Apple will find it cost effective or find it tolerable to build phones in India to the same quality as it is used to. Now, of course they will have done their own extensive analysis, but I imagine the following issues in plenty (even just supplying phones to the domestic Indian market):
- unreliable electric power (could be mitigated with huge backup generators)
- unreliable / poor quality road transport
- much less extensive or linked supply chain
- related to this, lower general quality of contributing required parts
- manufacturing and trade zone subsidies less transparent, more bribery
- more political interference at all levels of government interaction - simply refer back to the requirements to sell in India to begin with

I predict, and I would love to be shown wrong, that Apple will find this environment to be frustrating to no end. There are reasons that major electronic hardware manufacturers do not have world leading operations out of India.

Re:skeptical

[alvinrod]

It doesn't matter if it costs more, that's already an accepted fact. What matters is that he increased cost is still less than the additional cost they incur manufacturing elsewhere. With China right next door, India will never be a major manufacturing center for electronics, but if supplying the market in India (as small or large as it may be) allows Apple to generate more profit, they'll make the move. This is Cook's area of expertise, so I suspect that if Apple moves forward with these plans that they've figured out how to make money with this arrangement or expect the market in India to grow enough to compensate for the added manufacturing costs.

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[plover]

Maybe Apple has figured out the magical formula to scale "down" production to remain profitable while delivering just enough devices for a single nation. Normally, manufacturers want to scale up to realize the cost benefit of global production, but that doesn't work in India. They never want to import anything they don't have to.

India has dialed in on the way to make stuff happen locally. They recognize that every job created boosts their middle class, and reduces their overall poverty, so they don't see

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[ghoul]

India taxes any imports of phones at 50%. iPhones cost 1000$ plus in India. If Apple manufactures in India they can finally start competing in the Indian market. This is not about forcing all production to India. This is about balance of trade. After gold the highest dollar outflow from India is for electronics. The Indian govt is trying to minimize this by forcing partial(30%) manufacturing in India. No different from US imposing import taxes on BMWs made in Germany but not on BMWs made in South Carolina

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[backslashdot]

India's government is making a mistake with its protectionist policy. The taxing of the iPhone for importing it is detrimental to the Indian people. The iPhone offers a value to the Indian consumer that in turn would help them economically (easier communication, entertainment etc). Putting a tax on the iPhone makes a better quality of life only available to Indian elites.

By making the phones in India it is only a slight improvement on the idea of import taxation, there will be some cost to Apple (and there

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[ghoul]

India govts job is not to help Apple innovate. Its to build manufacturing ecosystems in India so Indians can have employment. Access to an Indian consumer market is a good lever to use. India already has better and cheaper phones than the iphone so its not a critical import its a luxury consumption item.

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[backslashdot]

If India has better and cheaper phones then why are people buying iPhones? Obviously your opinion about "better" is not the same as some other people. Maybe you shouldn't get to decide what's good for them?

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[Anonymous Coward]

Xiaomi is already in India. Foxconn makes phones for them in India so I suspect it will not be a bake from scratch endeavor by Apple.

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[monkeyxpress]

India is not going to be making the display, battery or silicon. At best they might be assembling the boards there, building the case parts, and assembling the final product. My guess would be Apple will be leaning heavily on the India govt to ensure they are only doing that final bit.

In any case, the critical parts of all those components are heavily automated. Board assembly is pretty much completely automated these days. Most of the case machining is automated (I think they still run drill & tap mach

Inefficiencies less than tariffs?

[perpenso]

If inefficiencies add X% to manufacturing costs but import tariffs would be X+5% would it not be worth it? As long as Apple does not have to heavily invest in plant, property and equipment or can recoup such costs fairly quickly.

Excellent

[ruir]

Finally iPhones will support Engrish. About time shall I say. https://www.buzzfeed.com/tasne... [buzzfeed.com]

Value of the components.

[lucaiaco]

By 30% of the product, they mean 30% of the value of the components.This is a breakdown of the cost for each component in the IPhone 5. http://www.digitaltrends.com/m... [digitaltrends.com]

This is highly doubtful.

[tlambert]

This is highly doubtful.

Given the huge amount of money India extorted out of Microsoft after Microsoft bought Nokia, "Oh, we found a bunch of taxes you didn't pay...", anyone with deep pockets, like Apple, would have to be incredibly stupid to manufacture phones in India.