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News » Apple outsources iPhone 16 Pro production to India

Apple outsources iPhone 16 Pro production to India

apple-outsources-iphone-16-production
Photo from Apple

CALIFORNIA, UNITED STATES —  Apple Inc. has made a significant shift in its manufacturing strategy by outsourcing the production of its latest iPhone 16 series to multiple countries, with India playing a crucial role. 

For the first time, the high-end iPhone 16 Pro models are being assembled in India, marking a pivotal moment in Apple’s efforts to diversify its supply chain away from China. This move aligns with the Indian government’s ambitions to establish the country as a global hub for consumer electronics manufacturing.

Apple began assembling iPhones in India in 2017, initially focusing on models like the iPhone SE. The diversification efforts gained momentum during the COVID-19 pandemic when production disruptions in China highlighted the risks of over-reliance on a single country. As a result, Apple, along with other U.S. tech giants like Microsoft and Amazon, has been shifting some of its manufacturing operations to India and Vietnam.

Foxconn’s role in India’s manufacturing surge

Foxconn, Apple’s largest contractor,  has been instrumental in this transition. The Taiwanese company invested heavily in India, with plans to build several new plants across the country. 

These facilities, located in Tamil Nadu, Karnataka, and Telangana, produced the iPhone 16 Pro and Pro Max models. 

The Indian government has also been proactive in attracting such investments, offering generous subsidies to Apple’s manufacturing partners. These incentives include a “production-linked incentive” scheme, which provides revenue-based payouts to manufacturers for up to five years. This financial support is designed to offset the significant costs associated with establishing new manufacturing facilities.

Geopolitical and economic factors driving the shift

Several factors are driving Apple’s decision to expand manufacturing in India. Rising geopolitical tensions between China and India, stemming from a 2020 border dispute, have led to increased tariffs on Chinese electronics and technology products. By manufacturing in India, Apple can mitigate these tariff impacts and better position itself in the growing Indian market.

India’s expanding middle class also presented a substantial growth opportunity for Apple. Despite currently holding only a 6% share of the Indian smartphone market, Apple’s sales in the country grew by 33% in the 12 months ending March 2023. 

Apple CEO Tim Cook described India as a “huge opportunity,” and the company has opened its first retail store in the country to capitalize on this potential.

Foxconn’s continued commitment to China

While Apple is expanding its manufacturing footprint in India, it continues to rely on China for a significant portion of its production. 

Foxconn’s Zhengzhou factory, the world’s largest iPhone production base, recently hired 50,000 new workers to meet the high demand for the iPhone 16 series. This recruitment drive highlights Foxconn’s commitment to maintaining its operations in China despite rumors of potential relocations.

Foxconn’s decision to increase wages and bonuses for its Chinese workforce also reflects the region’s competitive labor market. The company’s efforts to ramp up production emphasize the importance of the Chinese market, where Apple faces stiff competition from local brands.

Component sourcing from other Asian countries

Several key components of the iPhone 16 are also sourced from suppliers outside India and China. South Korean tech giants Samsung and LG provided the OLED displays that are crucial for the iPhone’s advanced screen technology. 

Additionally, Qorvo, a supplier of Apple’s power amplifiers, outsourced the production of wireless chips for the iPhone 16 antenna modules to United Microelectronics Corporation (UMC) in Taiwan. 

This strategic outsourcing ensures that Apple can maintain a steady supply of critical components while managing costs and mitigating risks associated with geopolitical tensions.

Contributions from the United States and Europe

The iPhone 16’s supply chain extends beyond Asia, with significant contributions from the United States and Europe. 

Corning Incorporated, a U.S. company, supplied the Gorilla Glass used in the iPhone’s display. Apple’s substantial investments in Corning’s research and development efforts, which aim to advance glass manufacturing technology, back this partnership. 

Additionally, Cirrus Logic, another U.S.-based company, provided the essential audio components for the iPhone 16. Cirrus Logic operates on a fabless production model, focusing on design while outsourcing fabrication to maintain flexibility and minimize costs. The company is committed to high standards of supply chain management, emphasizing sustainability and ethical practices through its affiliation with the Responsible Business Alliance.

In Europe, STMicroelectronics, a French-Italian company, manufactured the iPhone’s gyroscope. The company’s gyroscopes are known for their superior performance in measuring angular velocity, which is critical for features like gesture recognition and image stabilization.

NXP Semiconductors, based in the Netherlands, supplied the M7 Motion Coprocessor, which is pivotal for gathering motion data and enhancing health and fitness tracking capabilities on the iPhone 16. 

Strategic implications and future outlook

Apple’s decision to outsource various components of the iPhone 16 to multiple countries reflects a strategic approach to managing its supply chain. By leveraging a global network of suppliers, Apple can ensure resilience and flexibility in its production processes. This strategy also positions Apple to better navigate geopolitical challenges and capitalize on emerging manufacturing hubs like India.

As Apple continues to expand its manufacturing footprint in India and other regions, the company is likely to diversify its supply chain further to enhance efficiency and reduce costs. This approach not only supports Apple’s growth objectives but also contributes to the economic development of the countries involved in its supply chain. 

With ongoing investments and partnerships, Apple is well-positioned to maintain its leadership in the global smartphone market while adapting to an ever-evolving geopolitical landscape.

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