Amid the ongoing US-China conflict, the industry is focusing on Apple's efforts to shift its supply chain away from China to other regions. However, one of Apple's primary alternative destinations, India, is now facing challenges in its competitiveness compared to Vietnam. Vietnam offers a more favorable tariff structure and dedicated task forces to support investments, making it a more attractive option for companies looking to relocate their supply chains.
There are three main iPhone assemblers in India: Foxconn, Wistron, and local player Tata Group, with Foxconn accounting for approximately 70% of the assembly, while Wistron and Tata each hold around 15%. Local media outlet Business Standard reports that under the PLI scheme, the trio of Apple assemblers must invest more than INR30 billion (US$356 million).
Data from the Indian Cellular and Electronics Association (ICEA) indicates that the three companies have already invested over INR100 billion (US$1.18 billion). If Tata's investment in the new iPhone factory is included, the total will exceed INR250 billion (US$2.97 billion). Recently, Foxconn also pledged to increase its investments in India.
According to a report by Bloomberg, during the first six months of India's fiscal year, from April to September 2024, the export value of iPhones assembled in India grew by over 30%, reaching US$6 billion.
Furthermore, as reported by The Information, Apple has begun work on the new product introduction (NPI) for the basic model of the iPhone 17, primarily at Foxconn's factory in Bangalore. Indian officials have stated that Apple has committed to increasing the proportion of iPhones assembled in India to 25%, with an annual assembly target of 50 million to 60 million units.
Apple's iPhone manufacturing operations in India are expanding significantly. Initially, the company started by producing refurbished devices and basic models. Now, it is assembling the latest high-end phones alongside its factories in China and introducing new product introductions (NPI) for the first time. These milestones indicate substantial progress. However, despite this positive development, Apple is encountering some underlying concerns in India.
Business Standard points out that the biggest uncertainty for operators in India remains tax regulations and constantly changing tariffs. If companies only plan to sell phones domestically, this may not pose much of an issue. However, iPhone manufacturing inevitably involves imports and exports. For instance, although the PLI policy offers incentives to manufacturers, the tariff for importing electronic components into India is about 6.2%, compared to just 0.7% in Vietnam.
Moreover, operators who are active in both India and Vietnam note that conducting business in Vietnam is significantly easier. The Vietnamese government even established a task force specifically for Samsung Electronics, allowing major international players to meet with senior government officials monthly.
Samsung's extensive presence in Vietnam serves as a valuable reference for Apple as it expands its supply chain in India. Over many years, Samsung has actively integrated local businesses into its global supply chain to enhance efficiency and reduce costs. Among Samsung's primary and secondary suppliers, over 300 are Vietnamese companies.
In contrast, Apple currently collaborates with only 13 suppliers in India, many of which are Chinese firms; among the three major assemblers, only Tata is a local company. Following border conflicts between China and India, Chinese firms face potential obstacles when attempting to establish joint ventures with local Indian companies.
Recently, Apple CEO Tim Cook traveled to China, where he met with Chinese senior officials, reaffirming Apple's commitment to continue investing in China. It is widely believed that the importance of the Chinese supply chain and market remains undeniable. On the other hand, Apple's investment in India is still a work in progress.
