Apple contract manufacturers look to ramp up production in India, but getting more parts suppliers to join them remains difficult

Only a small number of electronics parts suppliers from China have set up a presence in India to support Apple’s major contract manufacturers

Parts suppliers like Sunny Optical have developed thriving operations in India because they also do business with the likes of Xiaomi, Oppo and Vivo

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Workers are seen at an assembly line inside Foxconn Technology Group’s smartphone manufacturing complex in Sri City, a special economic zone located in Tirupati district in India’s southeastern state of Andhra Pradesh. Photo: YouTube

Published: 9:30pm, 27 Dec 2022Updated: 10:29pm, 27 Dec 2022

Apple contractors looking to establish a robust manufacturing supply chain in India, similar to their existing operations in China, are not expected to achieve such economies of scale in the South Asian country in the near term, according to analysts.

At present, there are only a small number of electronics parts suppliers from China that have established a presence in India to support Apple’s major contract manufacturers, such as Foxconn Technology Group.

“It’s more challenging for key component suppliers to move to India, compared to how big manufacturers like Foxconn or Wistron can shift their production,” Ivan Lam, a senior analyst at Counterpoint Research, said on Tuesday. “If these component suppliers only have a single client in the country, setting up shop there might not be the most economically sound move to make.”

Lam said some of the major components suppliers in China that are now in India – including Shenzhen Huaxing Photoelectric Technology, Sunwoda Electronic Co and Sunny Optical Technology Co – had managed to develop their operations in the country because they also do business with the likes of Xiaomi Corp, Oppo and Vivo in the world’s second-largest smartphone market.

Workers are seen arriving at Foxconn Technology Group’s smartphone manufacturing complex in Sri City, a special economic zone located in Tirupati district in India’s southeastern state of Andhra Pradesh. Photo: YouTube

Getting more components suppliers to set up operations in India represents one of the biggest challenges for Apple’s major contract manufacturers, as Covid-19-related disruptions in mainland China prompt these companies to step up efforts to diversify their supply chain networks in Asia.

Moving out of China, where Apple has built a deep supply chain for close to two decades, will not be easy for both electronics component suppliers and the big contract manufacturers. It would take about eight years to move just 10 per cent of Apple’s production capacity out of China, where roughly 98 per cent of the company’s iPhones are being made, according to a Bloomberg Intelligence estimate.

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