Bangalore - Apple will begin assembling iPhones in India
by the end of April, a regional minister says, heightening its focus on the
world’s fastest-growing major smartphone market as growth slows elsewhere.
The US company has tapped Taiwan’s Wistron to put
together its phones in the tech capital of Bangalore in Karnataka, said Priyank
Kharge, the state’s information technology minister. Apple executives met with
him in January and confirmed the timeline, he said in an interview.
The start of iPhone assembly in India comes after months
of speculation on Apple’s plan for the market, which is led by rival
Samsung Electronics. It signals a renewed focus on the country, where it just
scrapes into the top 10, as growth begins to slow in China and other more
mature markets. The Cupertino, California-based company is said to have put
forward a long list of demands in negotiations with India’s federal government,
including a 15-year tax holiday to import components and equipment.
“Apple’s iPhones will be made in Bangalore and all
devices will be targeted at the domestic market,” said Kharge, IT minister for
Karnataka, of which Bangalore is the capital. Kharge said the state will help
Apple if it decides to turn to other contract manufacturers in the region. “We
did not discuss any other incentives,” he said.
Read also: Apple gets more iPhone fans
Apple didn’t respond to an e-mailed request for comment.
CEO Tim Cook said on an earnings call this week that
India is “the place to be.” He visited the country for the first time last
May as he sought government approval for Apple to open its own stores - a step
the company deems critical to growing the iPhone user base across the
country. Over the long run however, Apple needs to meet requirements that
single-brand retailers source 30 percent of components from within India.
Manufacturing locally will help with that.
Making iPhones locally could also score brownie points
with the national government. Prime Minister Narendra Modi wants companies to
make products in the country as part of his “Make in India” policy, aimed at
reaping the benefits that come from manufacturing facilities and jobs.
The company shipped 2.5 million iPhones into the country
in 2016. While that was its best year ever in terms of revenues and sales, it
only ranked 10th among vendors in the December quarter according to
Counterpoint Research. Apple accounts for less than 2 percent of shipments in
India, where an estimated 750 million smartphones will be sold by 2020.
More attractive
While Indian consumers currently buy mainly cheaper
devices made by Samsung and Chinese brands such as Oppo, Apple believes rising
incomes will make the premium-priced iPhone more attractive over time.
Apple doesn’t manufacture devices itself, but rather
partners with contract manufacturers to handle the capital intensive demands of
building factories and hiring staff. Its Indian phones will be assembled
through a plant on Bangalore’s outskirts operated by Wistron, a Taiwanese
contract manufacturer, bypassing usual partners such as Hon Hai Precision
Industry. Hon Hai, the main listed arm of Taiwan’s Foxconn Technology Group, is
said to be an option in future.
“In the longer term, it’s a great move,” Cook said on
this week’s post-earnings call. “We are in discussions on a number of things,
including retail stores, and fully intend to invest significantly in the
country.”