When it comes to manufacturing quality products or timely deliveries of orders, India still has its struggles. According to recent reports, a 50% rejection rate was observed for iPhone casings made in India. It is alleged that the phones manufactured domestically did not meet Apple’s quality criteria and ended up as waste or recycled material. With the increasing shift towards manufacturing in India, does this statistic conclusively determine the fate of manufacturing for the world’s largest phone company or are we scrutinising the manufacturing process through the wrong lens? 

India started assembling the older generation iPhones in 2017 and it was only towards the last quarter of 2022 that they started manufacturing new models, i.e., iPhone 14 in India. Until then, China had been, and still is, the largest manufacturer of Apple products. In 2022, over 90% of Apple products, such as iPhones, iPads and Macbooks, were made in China.

China’s Dominance

China started manufacturing iPhones in the middle of 2007. Steve Jobs moved the majority of manufacturing to China because the cost of labour was the lowest compared to other countries. In addition, China was then the only country in the world with a ready-made supply-chain network with production lines that could be scaled up in no time. Further, Tim Cook has mentioned that the reason China remains the manufacturing hub is not solely due to the availability of cheap labour, as it is widely believed, but also because of skill availability, quantity and location. To work on a profitable model, Apple does not own any factories in China and only works with manufacturing companies on a contractual basis. 

“Sweatshops”

China’s dominance as a manufacturing hub evidently stemmed from cheap labour. With time, technological innovations helped them advance their skills, but the common tag of running “sweatshops” was perennially criticised. Foxconn is Apple’s biggest iPhone maker, manufacturing as much as 70% of iPhone shipments globally. But, the plant has been laden with labour problems and mass protests have erupted over time. Apple was called out for indirectly employing workers who operated in unfavourable conditions. The workers were said to have been paid as little as £1.12 an hour, with several of them working for nearly 24 hours in a single shift. Foxconn has also had multiple incidents involving labour suicides and accidents.  

With such recurrent issues, Apple’s reliance on China for manufacturing capabilities became unsustainable over time.

Shift from China

Depending on a single country for manufacturing a large chunk of products posed its own risks from an economic and political perspective for the company. Two global incidents stirred the shift in Apple’s manufacturing dependency on other Asian countries, primary of which was Covid-19. Strict pandemic rules and continued lockdowns hampered manufacturing efforts and it was estimated that Apple lost $8 billion in revenue due to lockdowns in 2022. The tumultuous trade relationship between US and China, which occurred during Trump’s administration, also posed a threat to the future dealings between the countries. Furthermore, China’s stance in the Ukraine crisis put the relationship between the two countries under further duress. Apple has reportedly reduced production sites in China from 47% in 2019 to 36% in 2021. 

India Shines

In September 2022, India started manufacturing iPhone 14 models. Analysts from JP Morgan claim that Apple would move 5% of global iPhone 14 production to India and, by 2025, India will become a global hub for manufacturing 25% of all iPhones. Vietnam is said to manufacture 20% of Apple iPad and watches, 5% of MacBooks and 65% of AirPods by 2025. 

By inviting government proposals that offer tax incentives to boost local production, Apple has increased its manufacturing footprint in India. For instance, manufacturing of iPhone 14 started in September 2022 and three of Apple’s global suppliers—Foxconn and Pegatron in Tamil Nadu and Wistron in Karnataka—are currently operating domestically. Incentives of $550 million were offered to bring Apple and other device manufacturers to India. 

Roadblocks in India’s path

Although Apple’s suppliers have been in India for some time now, in 2020, Karnataka’s Wistron plant in Narasapura, Kolar, was vandalised by their employees. It was alleged that delays in payments and extended working hours led to protests by the workers, where company property and phones were destroyed. Wistron had incurred losses of over INR 437 crore due to the resultant vandalism and theft. 

In addition, with every manufacturing curve, the ramp-up period takes considerable time and depending on unit production capacity and the number of workers, the period can go up. China has been manufacturing iPhones since 2007—which gives it a ten-year jump start when compared to India— but has lost contracts due to its highly unstable government bodies and efficiency stance. India, a fairly new competitor in the iPhone manufacturing space, still has a long way to go and the current statistics might not be enough to seal its dream of becoming the next global manufacturing hub. 

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