The Supply Chain Matters blog provides a reader update on a December 2018 indication that Apple’s primary contract services manufacturer will be shifting some production of current iPhone models to India.

Bloomberg reports that the Chair of manufacturing contract services provider Foxconn indicates that the transition into volume production within its Chennai production facility will occur this year. Reportedly, Foxconn is ready to start initial trial production of the latest models of iPhones, to be followed by volume production. The report alludes that the new India based assembly line: .. would serve local and export markets by the time Apple announces its next iPhone models in September, people familiar with the matter have said.iPhoneX

The report differs from December indications, in that this will be a new production facility rather than expanding other current Foxconn electronics assembly facilities in the country. It further confirms that that production in India will provide a hedge against the imposition of additional tariffs imposed by China or the United States. The facility will likely serve as a basis for supporting Apple product demand among India based consumers, and with an expanded local presence, allow Apple to have an added physical stores presence in the country.

What appears not clear as-yet are Apple’s ongoing plans for China-based assembly and supply network component sourcing. Providing this augmented contract manufacturing presence in India could well be an investment in a lower-cost region, while providing Apple additional options to service Asian and Middle Eastern product demand.

What we found interesting from the report was Chairman Terry Gau’s quoted statement: “We have moved our production lines there.” Use of the word ‘move’ implies a transfer of assets vs. augmentation. That may be an indicator of a throttling back of China based assembly and manufacturing.

Unclear, at least for now, is the separate December report by Vietnamese state media indicating that Foxconn was further considering an expansion of consumer electronics manufacturing in Vietnam in order to secure an additional manufacturing capability outside of China.

The next several months will likely add more to the unfolding manufacturing and supply network shifting for Apple’s market support needs.

 

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