Apple’s supply chain makes billion-dollar investment in India – report

The next time humans have the capacity to understand that trade wars are usually bad for business, the billion-dollar decision by Apple’s manufacturing partners will be a textbook illustration of how supply chain diversity is a mandatory step for any global business.

The billion-dollar bet…

The Times of India is reporting that Apple contract partners have begun investing in manufacturing capacity in India. Foxconn leads the group though smaller component manufacturers are also involved, says the report.

This production facility won’t just be for manufacturing of products sold in India, the report states, but for “meeting the demand for its products” globally.

These moves come as India’s government seeks out ways to bring international tech firms to the country, taking steps such as liberalizing some protectionist trade rules, offering comprehensive inventives through a multi-agency approach.

Apple’s Tim Cook knows negotiation is better than any kind of conflict…

The importance of new markets

Apple hopes to be able to deliver its products in India at a slightly lower cost, enabling it to increase sales in the world’s second-biggest smartphone market.

Indian minister Ravi Shankar Prasad said: “Apple is on board as far as India’s success story is concerned.”

With this in mind, the company is looking to open its own retail stores in India, as well as ramping up local production.

The company also owns research centers across the country and has worked closely with government agencies to try to find ways through the economic challenges of protectionism.

The strategy is paying some dividends. Speaking during a recent financial call, Apple CEO, Tim Cook, noted double-digit YoY revenue growth in the country, with iPhone shipments climbing 19 percent.

The price is right?

Counterpoint Research recently pointed out that around 40% of Apple’s iPhone revenues in India were previously generated by iPhone 6 sales, but this changed when Apple re-priced its iPhone XR smartphone earlier this year.

When it did so, the iPhone XR contributed half of all iPhone shipments in India.

Apple has maintained that recalibration around price with iPhone 11, though its initial price is set a little higher.

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The entry-level iPhone 11 will cost Rs. 64,900 when it goes on sale in India on September 29 – that’s slightly more than the XR once discounted, but seems to have hit the spot with at least some Indian consumers, according to the analysts.

However, moves to make more devices in India will inevitably reduce the tariff India charges on products made outside the country even while tariffs in the U.S. market continue to inflate like some chaotically out of control balloon.

Photo by Ibrahim Rifath on Unsplash

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