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Apple To Start Making iPhones In India, Says State Government (bbc.co.uk)
vasanth quotes a report from BBC: Apple is to start making iPhones in the southern Indian state of Karnataka, the state's government has said. Ministers said Apple would start an initial manufacturing operation in the state, whose capital is the tech hub Bangalore, in April. The tech giant has a 2% share of India's mobile phone market, well behind South Korean rival Samsung. Apple has yet to officially confirm the plan, saying only that it is keen to "invest significantly" in India. But Priyank Kharge, minister of information technology and biotechnology in Karnataka, told the AFP news agency: "We have an understanding with Apple and we expect them to start manufacturing in Karnataka by the end of April." Reports said the plant is being set up by Taiwanese manufacturing company Wistron Corp. Apple has held a series of meetings with government representatives at both state and national level and is understood to be pressing for concessions before going ahead with such a move. Apple is currently unable to set up its own branded stores in India, which has a raft of rules to curb the activities of foreign companies. For it to be able to sell direct to customers in India, Apple would have to source 30% of the components of its products locally. Priyank Kharge, IT minister for the Indian state of Karnataka, said Thursday on Twitter: "Apple's intentions to make iPhones in Bengaluru will foster cutting-edge technology ecosystem [and] supply chain development in the state."
An alternative fact is that Apple is making all of its products in the USA and creating thousands of jobs. GO TRUMP!
"And by getting Apple to set up in Karnataka, he hopes says it should help promote to region's ambition to become a location for high-end manufacturing." http://www.bbc.com/news/busine...
I do not believe Apple will find it cost effective or find it tolerable to build phones in India to the same quality as it is used to. Now, of course they will have done their own extensive analysis, but I imagine the following issues in plenty (even just supplying phones to the domestic Indian market):
- unreliable electric power (could be mitigated with huge backup generators)
- unreliable / poor quality road transport
- much less extensive or linked supply chain
- related to this, lower general quality of contributing required parts
- manufacturing and trade zone subsidies less transparent, more bribery
- more political interference at all levels of government interaction - simply refer back to the requirements to sell in India to begin with
I predict, and I would love to be shown wrong, that Apple will find this environment to be frustrating to no end. There are reasons that major electronic hardware manufacturers do not have world leading operations out of India.
Manufacturing in India doesn't mean they can't use the Chinese factories for Asian Market or to build a US factory for the North American market.
sudo mod me up
The better, or dear leader is going to be very unhappy.
By 30% of the product, they mean 30% of the value of the components.This is a breakdown of the cost for each component in the IPhone 5. http://www.digitaltrends.com/m...
Do Indian companies make any components that could go into an iPhone? Last I heard, there weren't any fabs in India, which probably means there aren't any SMT parts makers, either. I mean, I suppose they could mill the enclosures, fabricate the PCBs, and mould the Gorilla Glass, and maybe say that it is 30% by weight, but I don't think that's what they mean. The best they could do is "source" the parts from an Indian company that then imports them from China/Japan/Taiwan, but I fail to see how that's going to encourage manufacturing of electronics in India in any meaningful way. Time will tell, I suppose.
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If inefficiencies add X% to manufacturing costs but import tariffs would be X+5% would it not be worth it? As long as Apple does not have to heavily invest in plant, property and equipment or can recoup such costs fairly quickly.
India does have fabs just not the latest ones which can make CPUs. There are many fabs making chips for televisions, radios and phones. Most of the surrounding chipset can be locally sourced with maybe the touchscreen, CPU and battery being imported. Also the example of Maruti (Suzuki India) shows that once the final assembly moves to India the part manfacturers also move lines to be near the final assembly. It even saves on transport costs for Apple for phones to be sold in Indian Subcontinent or Africa as India is closer to Africa than China. China has become expensive and other competing countries like Vietnam dont have a large enough local market to make manufacturing locally worth it so slowly most manufacturing is going to move to India (if it stays manual) or move to USA (if its automated).
Plus Apple can play games with the value - Apple employs more than 20000 contractors from big Indian outsourcing companies. These contractors provide at least 20-30% of the value of the software which goes into an iPhone and the support around it. That support and R&D cost is easily 30% of the cost of an iPhone so Apple can claim 10% value of an iPhone based upon using outsourced IT and software development. It can claim another 10% as cost of the Retail stores and logistics in India. SO it actually needs to move only 10% of the manufacturing value to hit the needed 30%. By doing this minimal change they beat a 50% import tax and get to open dedicated Retail Stores. IT just makes sense. Should have and would have happened long ago if Jobs hadnt hated India so much (he went there as a hippy in his pre Apple days and had his luggage swindled and had to beg for his food and travel money to get back) Cook doesnt have the same hangups about India.
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This is highly doubtful.
Given the huge amount of money India extorted out of Microsoft after Microsoft bought Nokia, "Oh, we found a bunch of taxes you didn't pay...", anyone with deep pockets, like Apple, would have to be incredibly stupid to manufacture phones in India.
In fact, iPhones had the same marketshare as the Lumia. In fact, in India, when apps are advertized, one sees as many that are available on Windows Phone as are on Android or iOS
The purpose of building outside the USA is to lower costs. India is cheaper than China, they just lack the infrastructure required for this. If they can get Trump to pay for the infrastructure in India then it works. India, Indiana, it's an American state, right?
American companies are very good at "Creative Accounting" to make gorilla glass + enclosure make up 50% of the cost of the phone, thereby "Product of India" achieved. The latest Intel fab will use smaller geometries, so new fab needed. May as well get it out of "Ground Zero" of a China/Taiwan war at the same time. China is getting expensive, it's time to move.