An official source told Times of India that Apple will invest $1 billion through its partners in India and boost its production capacity so as to meet the global demand for its products. Apple’s key supplier Foxconn will be the investment partner and the money will be used to set up a factory in Chennai where products will be manufactured for the global market.
A number of component suppliers will also be making an investment in India to start production and assembly.
Apple’s supplier Wistron already has factories in India where it assembles iPhones. However, it primarily assembles older iPhones which are used to meet the regional demand itself. Foxconn’s factory in Chennai will be assembling the high-end iPhone X series.
A trial run is already underway at the factory and Apple is also seeking clarity from the Indian government on export incentives.
Apple is currently in a fix due to the U.S.-China trade war. The US has imposed a 20% tariff on goods imported to the country from China. This is affecting Apple as all of its products are primarily manufactured and assembled in China.
While the tariff is already applicable on AirPods and other Apple devices, it will come into effect for iPhones after the holiday season ends. Apple is unlikely to increase prices and absorb the tariff thereby affecting its bottom line. No wonder then that the company is looking to diversify its supply-chain and move a certain amount of production outside of China.