Apple Adds a New iPhone 14 Supplier in India in Shift from China

Apple Inc.’s Taiwanese contract manufacturer Pegatron Corp. has started assembling the latest iPhone 14 model in India.

This makes Pegatron the second Apple supplier to produce the iPhone 14 in the country, apart from Foxconn and Wistron.

Foxconn began making the iPhone 14 in India in September, mere weeks after its global unveiling and much closer to parity with the start of production in China, where the vast majority of iPhones are still made.

Cupertino, California-based Apple is seeking alternative production hubs amid a trade war between Washington and Beijing and tight enforcement of Xi Jinping’s Covid Zero policy in China. At the same time, New Delhi is positioning India as a competitor to China’s manufacturing prowess.

Foxconn and Pegatron have their facilities in Tamil Nadu, while Wistron makes iPhones out of Bengaluru. Apple currently produces the iPhone SE, iPhone 12, iPhone 13 and iPhone 14 (basic) models in India. However, all the Pro models sold in the country are imported.

Wistron is also about to open another manufacturing facility in Kolar by the end of November, with production beginning from January onwards.

Wistron presently has four assembly lines for iPhone 14 production at their plant in the Kolar industrial area. One in Peenya, Bengaluru, is out of commission, while a third facility is used for repair of Apple products.

Foxconn is also expanding one of its factories in India close to its Chennai facility, with hiring currently on, said another executive. Pegatron started making iPhones for Apple for the first time in September.

China's contribution to global iPhone production is expected to drop to 91.2-93.5% of global shipments in 2022, from 95.8% in 2021. India's contribution will increase to 5-7% of global shipments and 85% of local demand by this year's end, up from 3% last year, according to Counterpoint Research.

Apple’s India shipments in 2023 is expected to surpass the record 6 million units anticipated in 2022 due to rising demand for premium smartphones backed by discounts and cash back offers. Apple’s shipments in 2021 was 4.8 million.

All three manufacturers are part of the government's Rs 41,000-crore production-linked incentive program (PLI) with Foxconn and Wistron having met the first-year targets in FY22. Pegatron started making iPhones from this year and will be eligible for claiming benefits in the next fiscal through March, 2023.

One big hurdle for more production shifting out of China is that the majority of iPhone components are still built there and have to be shipped to wherever devices are assembled. These have to get past the customs barriers of tariff and non-tariff measures.