Will the new iPhone be made in India?

Perhaps in the near future, the words “Made in India” will appear on the back of Apple phones.

According to Bloomberg, Foxconn Chairman Terry Gou said at an event held in Taiwan on April 15 that Foxconn is preparing to transfer iPhone production to India. In addition, Gou said that he had recently received an invitation to visit from Indian Prime Minister Narendra Modi.

In the future, we will play a very important role in India's smartphone industry, and we have moved our production lines to India.

Bloomberg also quoted people familiar with the matter as saying that Foxconn's Indian assembly line will begin providing assembly services at the same time as Apple's new products are released in September this year, and Foxconn plans to invest an initial capital of US$300 million.

As early as January this year, All Weather Technology mentioned that Foxconn was considering building a factory in India to produce high-end iPhones for Apple. According to the latest news, not only the high-end iPhone X, but also the first iPhone that has not yet been released, has already been "booked" in advance at Foxconn's Indian factory.

Prior to this, Foxconn has always used China as its "headquarters" for smartphone manufacturing, and this relocation also means a change in Apple's strategic map. India is expected to become another important developing country market for the company after China in the near future.

Competition from Huawei and Xiaomi caused Apple's smartphones to suffer setbacks in the Chinese market in 2018, which is also considered to be a major reason for the relocation of Apple's iPhone foundry. But even in India, Apple still faces strong competitors - Xiaomi smartphones officially replaced Samsung as the No. 1 in the Indian market share at the beginning of this year, and Xiaomi products have a unit price far lower than Apple's.

But on the other hand, there are many favorable factors for "settling down" in India. The most obvious one is that India is currently the fastest growing smartphone market in the world. It has the world's leading number of smartphone users, but at the same time has the lowest smartphone penetration rate in the world.

According to a survey by the Pew Research Center in 2018, the smartphone penetration rate in India is about 22%, almost the highest among the major countries in the world. This indicates that there is still huge room for expansion in the Indian smartphone market, which is also a market that major global mobile phone manufacturers are competing for.

At the same time, Indian Prime Minister Modi has been promoting his "Make in India" plan since 2014. The plan claims to increase the proportion of manufacturing in India's economy from 16% to 25%. Domestic smartphone component processing, along with military equipment and pharmaceutical products, is a key support project of the plan, and tariffs on such products have been significantly increased.

This has prompted large multinational manufacturing companies, including mobile phone manufacturers and automobile manufacturers, to rush to India to build factories to reduce costs. At least in the field of smartphones, the plan has led to the creation of 450,000 new jobs.

In contrast, Apple's sales in the Chinese market are weak. According to Bloomberg, citing Karn Chauhan, an analyst at Counterpoint Research in Gurgaon, India, the Chinese iPhone market is saturated for Foxconn, and the current labor cost is three times that of India, while India is still an emerging market in the smartphone industry with great potential and can serve as an export center in Asia.

Currently, Foxconn has two assembly plants in India, one in the south of Chennai and the other in the suburbs of Coimbatore. Since 2018, in addition to Apple, the plant has also manufactured electronic products for Nokia and Xiaomi.

Apple is not the only one that has discovered business opportunities in the Indian market. According to Sina Technology earlier this month, Xiaomi announced at its first supplier investment summit in India that it would open three new mobile phone factories in India, bringing the company's number of factories in India to six. In addition, Xiaomi will also cooperate with Foxconn to open a surface mount factory in India for PCB assembly.

This indicates that Xiaomi is still continuing to increase its investment in the Indian market, and Apple is bound to compete with Xiaomi again in India.