Case Study | Manufacturing in India: Apple’s being hit hard

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Every time Apple attempts to get close to success in India, a new hurdle pops up and throws its plan out the window. Recently, the pandemic eruption brought two of Apple’s under-contract factories manufacturing iPhones in India to their knees.

A minimum of 10 Chinese engineers at any Foxconn plant in Chennai in Tamilnadu caught the virus, as per a report by Taiwanese news agency CNA. Totally, more than 100 workers caught the virus at the factory.

Another Apple factory called Wistron on the outskirts of Bangalore in Karnataka (the one that struck the headlines for worker underpayment and unrest in December 2020) shut down for the first week of May right after identifying 60 Covid cases among the staff.

These hurdles struck when Apple was trying to increase their production in India after the Washington-Beijing trade war last year.

The shift

Apple was one of the few companies that moved a portion of their manufacturing section from China to India in 2020.

Apple’s suppliers conducted a plethora of investments in India in 2020 to improve manufacturing capabilities. In July 2020, Foxconn invested $1 billion (around Rs. 7,357 crores) into the iPhone manufacturing unit in India for the upcoming three years. While that took place, Wistron stated it had $400 million investment readied into the country, a third of that already spent.

Pegatron, another Apple supplier, also allowed a $150 million initial investment to build a plant in India last year.

The mobile manufacturing behemoth started setting up the inexpensive variant iPhone SE and iPhone 11 in India in 2020, and this March, the company is also starting to assemble iPhone 12 in the country. 

Another pandemic collapse

The production of the iPhone 12 in the factory at Chennai slipped violently by more than 50%, as the workers caught the virus and had to return to their residences as a combat maneuver. To say the truth, Apple is not the only struggling smartphone maker here. Xiaomi, Realme, Vivo, and Oppo are all facing challenges in India amid an inclination in virus infections and lockdowns.

This devastating state in the country, even today, will have a lasting effect on Indian smartphone manufacturing and hence the Indian smartphone market entirely.

Navkendar Singh, research director at International Data Corporation (IDC) stated that he expects some recovery in the latter half of 2021 however, the level of growth will be constrained due to reduced discretionary spending, supply shortage, and price hikes in components in the upcoming quarters and financial years.

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