Apple’s supply chain is accelerating the move to India

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Mar 03, 20236 mins

AppleMobileSmall and Medium Business

The process of uncoupling the Apple supply chain and China is moving ahead, but there are still many problems to solve.

The process of decoupling the Apple supply chain and China is accelerating, with the iPhone maker pushing partners hard to set up shop elsewhere.

Tech industry travels the Silk Road

While there are other important players, Hon Hai Precision Industry/Foxconn is Apple’s biggest partner and now plans to invest $700 million in a new plant in India to boost  production there.

This will be built on a huge 300-acre site near the airport in Bengaluru, Karnataka, and should create around 100,000 jobs. In contrast, Apple’s main iPhone factory in China currently employs 200,000. Foxconn has also committed to another factory in a neighboring state.

Challenges and opportunities

Challenges do lie ahead. India is bureaucratically complex, and while the government has made big changes over the last few years, regional problems remain.

Traditionally, this has hampered the evolution of manufacturing, though India is offering financial incentives to tempt big name manufacturers to begin work there.

Can it become a tech industry powerhouse? India has many advantages.

Infrastructure — energy, communications, roads, and rail — may also present a challenge, particularly when intra-regional rivalries get in the way.

An Apple partner might want to build a road between two regions, and even be willing to pay for it. But the project won’t move forward without permits. This may be why Foxconn is placing its new factory near the airport.

Education for all?

We know India has a great education system. Just look at the list of Indian-origin CEOs, including Sundar Pichai at Alphabet and Satya Nadella at Microsoft. You really don’t need to dig deep to find high-placed, highly effective leaders — but factories don’t just need leaders, they need educated workers, too.

The problem is that, unlike in China, access to education in India is not evenly distributed. Compare the literacy rates: 74% in India versus around 97% in China.

In other words, Apple’s supply chain will need to raise a few boats to find the quality and quantity of workers it needs. I expect this will require a combination of deep investments in high quality on-site education for employees and their families, supplemented by extensive production line automation.

Quality control

Apple customers are discerning. They expect and get high-quality devices. Weknow Apple takes quality control seriously.

What’s next?

So, can Apple or any other tech company successfully base production in India?

As I explained here, I think it will get there, eventually. I also suspect one reason Apple wants to get a critical mass of its manufacturing partners based there is so that it can as a group gain a stronger voice when dealing with administrative and bureaucratic challenge.

I’ve no doubt whatsoever the nation will also benefit from Apple investments, from clean power production to advanced manufacturing support. (As I write this, Apple in India has announced a plan to improve water management in Bengalaru with NGO Frank Water.)

This shows that even within the complexity of migrating its supply chain to a new continent, Apple is not about to abandon its attempt to build a 100% carbon neutral supply chain. But it’s going to take time, commitment, and a lot of lateral thinking until that chain navigates to where it is going.

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Hello, and thanks for dropping in. I'm pleased to meet you. I'm Jonny Evans, and I've been writing (mainly about Apple) since 1999. These days I write my daily AppleHolic blog at Computerworld.com, where I explore Apple's growing identity in the enterprise. You can also keep up with my work at AppleMust, and follow me on Mastodon, LinkedIn and (maybe) Twitter.