I as a customer am super glad this is coming along. Tired of paying a premium for Apple products in India. In addition to iPhones I seriously hope they start iPad manufacturing as well. IMHO iPads will probably have a better success rate in India once the prices reach parity with US.
Apple prices based on demand curves, not supply costs.
For example: a 64 GB iPhone X is currently selling for around 1100 dollars.
But that doesn't mean it will become affordable, Apple has positioned itself as a luxury brand & is said to have the largest markup among smartphone manufacturers.
Indians looking for cost/value will always have better alternative, but for those 'Who value themselves upon what others see in their hands' will burn lesser cash than before.
I might be wrong but, I think, OP might be referencing to the fact that phones manufactured in India are exempt from import tarrifs (cross trade avg of around 14%).
First of all $300M isn't a lot of money for this sort of operation. I guess it barely buys a good line of equipment, installed with an operable workforce, if that. Secondly, the amount of manual labour in iPhone assembly has to be pretty minimal with respect to margins. Can anyone enlighten us to the management situation?
I guess perhaps the true story behind the 'asserted' transition to an additional base in India includes other factors like: freeing Foxconn capital from China (currently their largest production base, with rising costs, a slowing market and perennial foreign exchange hassles), gaining additional internal production operations experience within a foreign non-'Chinese' (ie. Taiwan/China) environment, and cross-jurisdictional legal/tax/tariff/exchange rate hedging. (The US-China trade war has to have scared the pants off anyone in a consumer electronics this heavily.)
1. Logistics: Cheaper to ship to rich Middle east and maybe even Europe
2. Risk balancing: With uncertainty at political levels about tariffs and trade rules, it makes sense to distribute production to multiple places in the world.
3. New demand: Lower cost of production == lower prices in India. Apple has negligible penetration in the largest fastest growing market. This move is a bet to try to beat android competition in price and raise global demand for IPhones.
Honestly, this move is a no-brainer. The benefits are endless.
India is a huge market. So it‘s all good. Brazil is a good deal smaller and requires the same thing. So does Argentina (and is even smaller). Now imagine every country would do this.
iPhones are a luxury product. A tax on imported high end electronics is a tax on the well-off. Not only that, it's the best kind - a tax that an end-user can choose whether or not they want to pay.
According to the latest market research [1] in China, IPhone are mostly used in China by undereducated people with relatively low income, people with decent education & job mostly use Android phones.
This is consistent with what I see on daily basis - almost all my friends & coworkers use MacBook Pro + Huawei/Xiaomi phone. If I try really really hard, I can probably eventually list 1-2 friends & coworkers who use iPhone, but like I said, I need to try hard to recall that.
[1] https://www.scmp.com/tech/article/2174310/research-highlight...
There was a time when the British destroyed the textiles trade in India and made everyone buy stuff made in Manchester. Before that India had 25% or so of the global market.
With a billion or so people living in the sub-continent there should be an indigenous mobile phone and eco-system that suits the market better than what Silicon Valley can provide. China can do it, Europe used to be able to do it. It is not as if India is short of highly educated software engineers. If, instead of everyone in India having an Indian mobile phone, everyone has an iPhone then everyone is going to be sending off a portion of their wealth off to Cupertino (even if that money ends up in off shore tax havens).
There are national security issues with this, regardless of how well Apple claim they are on the side of privacy. Just for sovereignty reasons the Indian government should be using heir own tech instead of providing incentives for Apple to set up shop.
why would it matter where you're sending a portion of your so-called "wealth" when you're getting something in return?
considering the horrific state India is in (high corruption, high poverty, low healthcare, no infrastructure, you name it), the location of where an iPhone is produced should literally be the last thing the government cares about.
maybe the value of the potential taxes are too much for the government not to stick their hands in?
At least in the context of the last few generations, this is not an unusual avenue to globalization. It's pretty much the template followed by auto manufacturing as it globalised, for example.
Also how "complicated" is the manufacturing? Is it just lsat-mile assembling of all pre-made components shipped in from the US, China, Germany, et al. or the same technical processes and complexity that goes on in one of these Chinese plants that pump out the iPhone X, XS and XS Maxes?
Apple doesn't manufacture in the US as they are not forced to manufacture in the US. If they were, they'd make it happen and work-around any issues, just as they have in India.
Apple doesn't want to manufacture in India (via Foxconn) but the Indian regulations and government didn't budge which forced Apple's and Foxconn's hand. Result: Apple/Foxconn is now making iPhones in India.
If the US citizens stood up for their own interests more, then there would be a Made in the USA iPhone... perhaps more expensive than a China made one, but Apple may decide to absorb the margin hit to retain marketshare in their largest market.
[1] https://www.theverge.com/2019/1/28/18200330/why-apple-cant-m...
