Apple Inc is facing challenges as it tries to increase production in India, the Financial Times reported on Tuesday, citing people familiar with the iPhone maker’s operations.
The Cupertino, California-based company has been shifting production away from China after the country’s strict COVID-related restrictions dented supply chains across industries and as trade and geopolitical tensions between Beijing and Washington escalated.
At a casings factory in southern India run by conglomerate Tata, only about half of the components from the production line are in good enough shape to be sent to Apple’s supplier Foxconn, FT reported, citing a person familiar with the matter.
This 50 percent ‘yield’ does not meet Apple’s goal for zero defects, FT reported, adding that the company’s process of expanding in India has been slow in part due to challenges in logistics, tariffs and infrastructure.
Apple and Tata did not immediately respond to a request for comment.
Apple has bet big on India since it began iPhone assembly in the country in 2017 through Wistron and later Foxconn, in line with the Indian government’s push for local manufacturing.
Last month, India’s trade minister said that Apple wants India to account for up to 25 percent of its production from about 5 – 7 percent currently.
On Monday, an executive from Finland’s Salcomp, a supplier to Apple, said that the company was looking to more than double its workforce in India to nearly 25,000 over the next two-three years.
Salcomp, a major supplier of chargers to the iPhone maker, is also setting up a housing complex with entertainment and education facilities for about 15,000 people. The company, which currently employs about 12,000 people in Chennai with 85 percent of them being women, had reached an agreement in 2019 to take over a facility, formerly owned by Finnish telecom equipment maker Nokia, in Chennai and started operations in 2020.
Foxconn, another Apple supplier, also plans to quadruple the workforce at its iPhone factory in India over two years, Reuters had reported last year. Currently, iPhone models are assembled in India by at least three of Apple’s global suppliers: Foxconn and Pegatron in Tamil Nadu; and Wistron in nearby Karnataka state.
Earlier this month, it was reported that India could see an increase in mobile phone production this year after the government eliminated import tariffs on some components used to assemble high-end phones from global companies such as Apple.
© Thomson Reuters 2023