SUMMARY
Apple is engaging with suppliers in automotive, aerospace and consumer electronics to explore potential supplier arrangements across multiple product categories
Apple is in preliminary talks with potential suppliers capable of custom-designing and producing parts and machinery for OEMs
The Cupertino-based company has been scouting for Indian, Japanese and South Korean suppliers who can provide critical components to its contract manufacturers in India
In the wake of Apple reportedly scouting for Indian, Japanese and South Korean suppliers who can provide critical components to its contract manufacturers in India amid reports that the global smartphone major is looking to beef up its iPhone production in the country to over 50 Mn units annually, the company has now started reaching out to various suppliers across automotive, aerospace, and consumer electronics sectors for the critical parts.
As per Mint’s report, Apple is reaching out to these above-mentioned sectors to explore potential supplier arrangements across multiple product categories.
Apple is in preliminary talks with potential suppliers capable of custom-designing and producing parts and machinery for original equipment manufacturers (OEMs), as well as those who currently act as contract manufacturers for several global firms.
Several suppliers have already begun investing in new capabilities, machinery and equipment, positioning themselves as potential suppliers to Apple pending an extensive cycle of certification and approvals, according to Mint.
Apple aims to diversify its operations in India, which has been predominantly concentrated in China.
According to an Economic Times report, the tech giant is looking for equipment like batteries, camera lens, chargers and others required to make its flagship iPhones and iPads in India.
This comes at a time when the Indian government has delayed approvals to import such above-mentioned equipment from the existing suppliers, majorly of Chinese origin.
In January, nearly 17 Chinese companies that supply components for Apple devices, applied for clearances to set up manufacturing facilities in India, which have been put on hold by the government.
Of the suppliers, Sunny Optical Technology Group and Han’s Laser Technology Industry Group are camera lens makers, Luxshare-ICT is airpod maker and ON Semiconductor Shenzhen China is a capacitor chip maker.
“They are definitely scouting quality suppliers with different portfolios and parts. They have to find the ecosystem to be good, and pricing and capability to be right to make firm decisions. Right now, various teams in Apple are holding conversations directly with vendors, including at the Tier 2 and Tier 3 level,” Mint reported, citing people close to the matter.
Apple’s conversations with these suppliers go beyond the iPhone and include laptops and PCs. However, sources indicate that while Apple will be keen on localising its Macbooks in India in the backdrop of a strict government stance on reducing laptop imports to foster domestic value addition, such a move could be at least two years away.
This development comes at a time when Tata Electronics, a subsidiary of Tata Group, acquired Wistron’s manufacturing facility in Karnataka, entering the assembly of Apple iPhones. Tata Group is reportedly gearing up to construct one of India’s largest iPhone assembly plants in Tamil Nadu’s Hosur.
Since 2018-19, Apple has increasingly concentrated on iPhone manufacturing in India. Production, which stood at INR 16,750 Cr in 2020-21, has witnessed a remarkable surge to INR 60,000 Cr in just seven months of the current fiscal year.
For FY23, Apple India reported a year-end turnover of INR 49,321 Cr. However, this figure represents only 1.5% of Apple’s global turnover, which amounts to a substantial INR 32.6 Lakh Cr ($383.93 Bn).
With a continued focus on the Indian market, Apple aims to achieve a significant milestone by manufacturing more than 50 Mn iPhones in India by March 2024, as it looks to double down on production in the country as part of its efforts to reduce reliance on China.
Apple’s business in India has been a matter of discussion for some time now. Earlier in April, the Cupertino-based company was reported to be producing about 7% of its iPhones in India now, as against a mere 1% in 2021. In fact, of the iPhones produced in India last fiscal year, $5 Bn worth of smartphones were exported, the report said citing sources.
However, Apple recently said that the production of iPhones in India may be impacted if India mandates the European Union law about universal charging points for all smartphones. Though other smartphone makers including Samsung have agreed to comply with India’s plan, Apple is resisting the move.
Yet another brief tension between the Indian government and the smartphone maker broke out when members of Parliament from the opposition party claimed that they received alerts on their iPhones against state sponsored attackers.
