Apple is now building the iPhone 11 in India

mongeese

Posts: 412   +63
Staff member
What just happened? India’s Minister for Commerce and Industry Piyush Goyal has confirmed reports that Apple is manufacturing the iPhone 11 in India. It’s an easy victory: Apple has reduced their reliance on China, and they can bypass India’s significant import tax.

Apple has wanted to produce devices in India for several years. According to TechCrunch, they had been unable to find a local manufacturer capable of meeting their stringent quality standards, so they’ve had to wait for new assembly lines to be built. In 2017, Wistron began producing previous years’ flagships in India to sell as budget devices, but as of this month, Foxconn has been able to produce the iPhone 11 at their facility near Chennai. The first batch is believed to have already shipped to nearby retailers.

Apple CEO Tim Cook announced in February that Apple will launch an updated online storefront in India in the next few months, and will open brick-and-mortar stores next year. Recently, Apple’s manufacturers Foxconn and Pegatron both announced plans to invest in their Indian facilities. India is the world’s second-largest smartphone market and one that’s much further from saturation than America or China.

There’s one key question that remains, though. Apple won’t have to pay a 20% import tax anymore. Although manufacturing in India is probably more expensive than manufacturing in China, Apple will still be saving a fortune. Will they pass those savings onto consumers and give them a discount, or will they widen their profit margins?

Image Credit: Jason Leung on Unsplash

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OortCloud

Posts: 429   +276
I expect China has already bought large stocks in all the companies involved...

Edit:
Sorry just read the article beyond the headline... cancel that they are Chinese companies already so nothing has really changed...
 
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Edster

Posts: 55   +43
So, relying on the cheap Indian workforce employed by Chinese companies is better ? How ?

It‘s actually sad that we in the West are unable to make expensive high end devices and have to rely on others.
Not that we can't, we won't pony up. As much as people always cry "buy local" and appreciate quality, when push comes to shove, lowest price wins even if it is shipped across the globe.
 

mongeese

Posts: 412   +63
Staff member
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For everyone curious, the three manufacturing partners Apple uses for iPhones are Foxconn, Pegatron, and Wistron. All three are headquartered in Taiwan and are majority Taiwanese owned. However, anywhere from two-thirds to nine-tenths of their manufacturing capacity is in China.
 

nonamepew

Posts: 8   +41
Not that we can't, we won't pony up. As much as people always cry "buy local" and appreciate quality, when push comes to shove, lowest price wins even if it is shipped across the globe.
As long as people are needed for such manufacturing jobs, west won't be able to compete in terms of price. In India, we have basically countless number of jobless people that they will work at whatever the money they are getting. In most of the manufacturing plants, the workers earn around $2000-3000 yearly.
 
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Irata

Posts: 856   +1,211
TechSpot Elite
Not that we can't, we won't pony up. As much as people always cry "buy local" and appreciate quality, when push comes to shove, lowest price wins even if it is shipped across the globe.
That's a sad reality. Thing is, I can understand this when it comes to $30 smart watches or cheap tablets, but phones, tablets costing $ 1000 +, basically expensive high end products....no. Labor only makes up a small part of the overall cost.

This is why I don't feel the least bit sorry when these companies lose sales to cheaper Chinese OEM selling basically the same product for a good bit less.
 
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Heavens

Posts: 9   +4
That's a sad reality. Thing is, I can understand this when it comes to $30 smart watches or cheap tablets, but phones, tablets costing $ 1000 +, basically expensive high end products....no. Labor only makes up a small part of the overall cost.

This is why I don't feel the least bit sorry when these companies lose sales to cheaper Chinese OEM selling basically the same product for a good bit less.
I'm pretty sure wages are the largest chunk of cost you can't just cut away.

According to some googling manufacturing cost is about 2% of the total price, if you'd do that in the western world it'd be about 6-7%.
No capitalistic company is to just give up that margin to just "grow local".

 
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Irata

Posts: 856   +1,211
TechSpot Elite
I'm pretty sure wages are the largest chunk of cost you can't just cut away.

According to some googling manufacturing cost is about 2% of the total price, if you'd do that in the western world it'd be about 6-7%.
No capitalistic company is to just give up that margin to just "grow local".
Short term that is maximizing profits, mid to long term you are weakening your local markets and become dependent on foreign markets. And if these foreign markets decide to give you a hard time...

Anyhow, labor cost is not really the problem. Here‘s from an interview with Tim Cook:

There’s a confusion about China… the popular conception is that companies come to China because of low labor cost. I’m not sure what part of China they go to but the truth is, China stopped being the low labor cost country many years ago and that is not the reason to come to China from a supply point of view…

…the reason is because of the skill… and the quantity of skill in one location… and the type of skill it is. The products we do require really advanced tooling. And the precision that you have to have in tooling and working with the materials that we do are state-of-the-art. And the tooling skill is very deep here.

In the U.S. you could have a meeting of tooling engineers and I’m not sure we could fill the room. In China you could fill multiple football fields.
 

Gypsygib

Posts: 78   +60
Good. Firm up the lines, make sure supplier contacts are reliable, and cut China completely out of the process. Excellent move.

Western World 1 - China 0



Man, I love an optimist.

I don't think it's wise to create another competing economic power, manufacturing should be diversified across multiple countries so no one country becomes necessary or a real competitor. If they get there on their own, all the power to them, but the West contributed greatly to making China what it is today - a competing superpower which turned out to be a huge mistake. Don't think India isn't also trying to topple current powers, they want to be a top dog just like everyone else and often view Western culture negatively behind closed doors.
 
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sac39507

Posts: 323   +147
Good move. Good way to stick it to the CCP. Build in America? Americans will not pay $3000 for a phone...or will they? The red tape and regulations couldn't even be removed for something as critical and life saving as tests for Covid-19. How could companies expect to be incentivized by bringing business to a place of higher costs and possibly stricter regulations?
 

sac39507

Posts: 323   +147
Short term that is maximizing profits, mid to long term you are weakening your local markets and become dependent on foreign markets. And if these foreign markets decide to give you a hard time...

Anyhow, labor cost is not really the problem. Here‘s from an interview with Tim Cook:
It doesn't take much skill to work an assembly line. That's BS