The strategic move can potentially benefit both Apple and Foxconn as it can significantly diminish the impact of the U.S.-China trade war, as well as take advantage reduced import duties.
According to a source familiar with the matter at hand, Apple Inc will begin assembling its high-end iPhones in India through a local unit of Foxconn. The development assumes significance since this will be the first time that Foxconn, the world’s biggest contract manufacturer, will be producing Apple’s top tier phones in the country.
If the rumors turn out to be true, Foxconn will be assembling the iPhone X, Apple’s flagship phone, in India which could take its business in India to a new level.
Foxconn is likely to use its Sriperumbudur plant in southern India, said the source on the condition of anonymity since he is not authorized to speak to the media.
Foxconn already makes phones for China’s Xiaomi Corp in India. It will further $356 million (25 billion Indian rupees) to expand the plant, said Tamil Nadu’s Industries Minister M C Sampath. He went on to add, the investment is likely to create 25,000 jobs.
The development is strategic since it could enable Apple Inc to limit the impact of the U.S.-China trade war.
Trudy Muller’s Apple’s spokeswoman, declined to comment. Foxconn stated, does not comment on matters related to current or potential customers, or any of their products.
According to analysts, having launched its pricey iPhone X in 2017, it has begun to cut production costs. Apple began selling its iPhone XS and XR phones globally from this year.
For Apple, looking beyond assembling in China is critical to its U.S.-China trade war risk mitigation strategy.
Earlier this month, Vietnamese state media reported Foxconn is potentially looking to set up a plant in Vietnam. If that becomes reality it would mark its biggest recent step to secure an additional production base outside of China.
“Widening iPhone manufacturing in India through Foxconn will allow Apple to hedge the risk of any new U.S. trade policies,” said Navkendar Singh, an associate research director at International Data Corporation.
Further, Indian taxes on import of devices and components have also heightened Apple’s overheads in India, a market where it has a 1% market share by smartphone shipments.
Last month, Apple shocked investors when it reported a lower-than-expected sales forecast for the Christmas quarter.