Smartphone major Apple‘s manufacturing partners Foxconn(HonHai) and Wistron are set to achieve their PLI(Production-Linked Incentive) targets by the end of this fiscal year, having increased the production of iPhones for domestic and export purposes in the past few quarters, people with knowledge on the matter have said.
Apple’s share of made-in-India iPhones has increased from 17% in 2018 to 76% now, while its share of smartphone exports from the country is now at 5% from zero a couple of years back, as per Counterpoint Research.
A person familiar with the matter said, “They(Foxconn and Wistron) were not able to fully utilize the installed capacity last year, but they have now picked pace and will achieve this year’s target easily before the stipulated time, their export run-rate is also very good, which is also helping both Apple’s partners. India-made phones are being sold in markets in Europe as well.”
Under the handset PLI scheme, foreign companies needed to invest 250 crore INR each and to produce an incremental output of 4,000 crore INR in the first year to get a 6% direct incentive as cashback.
While Apple’s existing partners continue to grow, its third partner, Pegatron’s India manufacturing plans may take more time to start due to pandemic-induced hiccups. It had previously finalized plans to train nearly 5,000 people at its maiden factory in the country in Tamil Nadu.
Another person said, “They need people to come from outside to install machinery but because of travel restrictions and other issues there are some delays. It will take some time for Pegatron to start production.”
Pegatron, Apple’s second-largest manufacturer after Foxconn, registered its India subsidiary last year and is investing $150 million, nearly 1,100 crore INR in its operations initially.
All three Apple suppliers, Foxconn, Wistron, and Pegatron have been approved under the Centre’s Production-based scheme, which mandates investment and incremental production targets to provide direct monetary incentives in the next five years.
They have made a commitment to make 3.6 trillion worth of iPhones in India in the next 5 years, out of which 80% are set to be exported.
Tarun Pathak, research director at Counterpoint, expects Wistron and HonHai to meet PLI targets this fiscal through March 2022, as there is strong demand for iPhones in India, and localizing the assembly process has been beneficial for them.
2017 was Apple’s best year in terms of iPhones as it shipped 3.2 million iPhones. Apple shipped 3.1 million iPhones in 2020 despite the pandemic. which goes on to show that the mature smartphone user base is growing exponentially.
Apple’s shipments are expected to touch a record 4 million in 2021, while CMR pegs it at close to 5 million, driven by local manufacturing and demand for devices such as the iPhone 12 and iPhone 11.
Pathak added that the one-year extension granted under the PLI scheme will help Apple and its partners to ramp up their business in India.
The US giant is launching its latest iPhone 13 Series in India along with developed markets like the US and Europe for the very first time. Analysts have said that they will now reduce the time between the launch of the new series and its manufacturing in India through partners.
The early availability of the iPhone 13 Series in India will help the company further push growth in India with revenue likely to reach $3 billion, market trackers have said. CMR estimates close to 3% volume market share in 2021.
Foxconn currently assembles Apple’s iPhone 12 in India along with iPhone 11, while Wistron is manufacturing the Apple iPhone SE 2020. Apple still imports the Pro variants of its iPhones for both the 11 and 12 Series.
With the launch of the new series, Apple has reportedly discontinued the iPhone XR and the iPhone 12 Pro models.
Wistron is still under probation from December 2020 for non-payment of worker salaries in its Narasapura, Karnataka facility, which means it is not able to manufacture Apple’s new devices.
Source: ET
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