Analysts said that Apple contractors hope to establish a strong manufacturing supply chain in India, similar to their existing business in China, but are not expected to achieve such economies of scale in this South Asian country in the short term.
It is reported that only a few electronic component suppliers from China have set up a stronghold in India to support Apple’s major contract manufacturers, such as Foxconn. “Compared with the transfer of production by large manufacturers such as Foxconn or Wistron, the transfer of key parts suppliers to India is more challenging,” said Ivan Lam, senior analyst at Counterpoint Research on Tuesday. “If these parts suppliers have only one customer in the country, opening a store there may not be the most economical and reasonable measure.”

Lam said that some major Chinese component suppliers in India, including Shenzhen Huaxing Optoelectronics, Xinwangda Electronics and Sunny Optics, have managed to develop business in the country.
Getting more parts suppliers to do business in India is one of the biggest challenges facing Apple’s major contract manufacturers.
Apple has established a deep supply chain in Chinese Mainland for nearly 20 years, but it is not easy for electronic component suppliers and large contract manufacturers to leave China.
Bloomberg estimates that it will take about eight years to transfer 10% of Apple’s production capacity out of China, and about 98% of the company’s iPhones are produced in China.
Upasana Joshi, client device research manager of IDC India, a research company, said that Chinese manufacturing continued to dominate Apple’s supply chain. Joshi said in November last year that for Apple and its various suppliers, the large-scale transfer of iPhone production from China to other Asian countries “does not look like a feasible solution”.
Foxconn, headquartered in Taiwan, China, China, has been one of the most active Apple contractors to strengthen its efforts in India. Earlier this month, the world’s largest electronic contract manufacturer injected $500 million in cash into its Indian subsidiary, Foxconn Hon Hai Technology India Giant Development Company.
It is reported that New Delhi is considering various methods to make it easier for major electronic contract manufacturers to bring their parts supplier network to the country. According to the report of the Times of India, citing government sources, India is said to be discussing with some major Apple contract manufacturers whether to allow Chinese parts suppliers to set up joint ventures in the country.
Canalys analyst Toby Zhu could not confirm whether such discussions had started, but he said that, in view of “the lack of comprehensive smartphone manufacturing in this country, leading to high local production costs, the cost of establishing some semiconductor parts factories [in India] would be huge and technically challenging,” Zhu said.