Apple Supplier Foxconn Ramps Up iPhone 15 Production in India Amid Supply Chain Diversification

Edited by: TJVNews.com

Apple supplier Foxconn has commenced production of the iPhone 15 in India, marking a significant step in the company’s efforts to diversify its manufacturing away from China, as was reported on Wednesday by CNBC. The move comes as part of Apple’s broader strategy to reduce its dependence on Chinese production and supply chain, a dynamic further intensified by the growing tension between the United States and China.

According to reports by Bloomberg, Foxconn’s Sriperumbudur plant is gearing up to manufacture the new iPhones, with deliveries expected to begin a few weeks after the devices start shipping from factories in China, according to the CNBC report. This approach aligns with Apple’s strategy of having multiple manufacturing locations to ensure a more resilient supply chain and mitigate potential disruptions.

The shift to India is part of Apple’s response to the evolving geopolitical landscape and trade dynamics. CNBC also reported that the U.S. administration, led by President Biden, has taken various measures to curb the flow of critical technologies and investments to China due to concerns about the Chinese government’s influence and control. At the same time, China has also implemented restrictions on the sale of certain U.S. semiconductors, creating a more challenging environment for technology companies relying heavily on Chinese production, the CNBC report said.

Apple’s efforts to diversify its supply chain have gained momentum in recent years. The company has been expanding iPhone production in India, with reports suggesting that it produced over $7 billion worth of iPhones there in the last fiscal year, as was reported by CNBC. The shift to India has been driven by factors such as cost advantages, availability of skilled labor, and a strategic move to lessen reliance on any single production location.

India’s Prime Minister Narendra Modi has highlighted the country’s potential as a manufacturing hub, presenting a “huge opportunity” for companies like Apple, the CNBC report noted.  The growing production capabilities in India have allowed Apple to reduce the gap between iPhone assembly in India and China, a gap that used to be six to nine months.

Apple is anticipated to announce its new lineup of iPhones, including the iPhone 15, at its annual event in September. According to the CNBC report, rumors suggest that the iPhone 15 will feature significant camera upgrades and improved processors in the Pro models. Alongside Foxconn, other manufacturers like Pegatron and a Wistron factory acquired by the Tata Group are also reportedly gearing up to assemble the iPhone 15 in India, contributing to the broader diversification strategy, the CNBC report added.

While companies like Pegatron and Wistron have declined to comment on these reports, the move underscores the broader trend of technology companies seeking to enhance the flexibility and resilience of their supply chains by diversifying manufacturing operations across different geographical locations.

In a related development, China’s debt-laden property giant, Evergrande Group, has taken a significant step by filing for Chapter 15 bankruptcy protection in a U.S. court, CNBC reported on Thursday. The filing, submitted to the Manhattan bankruptcy court, references ongoing restructuring proceedings in various jurisdictions, including Hong Kong, the Cayman Islands, and the British Virgin Islands. This move comes as Evergrande continues to grapple with a mounting debt crisis that has had far-reaching implications for China’s property sector and economy, according to the CNBC report.

Evergrande, once the world’s most indebted property developer, faced a default in 2021 and later announced an offshore debt restructuring initiative in March. The CNBC report said that its shares have been suspended from trading since March 2022, casting a shadow of uncertainty over the future of the company.

Chapter 15 bankruptcy protection enables a U.S. bankruptcy court to intervene in cross-border insolvency cases involving foreign companies that are undergoing restructuring due to creditors’ pressures. The CNBC report noted that the primary aim of this protection is to safeguard the assets of debtors and facilitate the rescue of financially distressed businesses.

The filing is not isolated, as Tianji Holdings, an affiliate of Evergrande, and its subsidiary Scenery Journey, have also sought Chapter 15 protection in a Manhattan bankruptcy court, as indicated in the filing and reported by CNBC.

Evergrande’s bankruptcy filing comes amidst concerns of contagion, as China’s property sector woes could potentially spread to other segments of the economy, which is already grappling with slowing growth. CNBC reported that this has been evident in recent events, such as Country Garden, a once-prominent Chinese developer, struggling with coupon payments on U.S. dollar-denominated bonds and issuing a profit warning.

China’s expansive real estate sector has long been a cornerstone of the nation’s economic growth, accounting for a substantial portion, up to 30%, of the country’s gross domestic product (GDP). Despite recent policy shifts signaling increased support for the property sector, apprehensions persist among investors, the CNBC report noted.

In July, Evergrande reported combined losses of $81 billion over the past two years, primarily attributed to challenges in completing projects, repaying suppliers, and meeting financial obligations to lenders. According to the CNBC report, the net losses for 2021 and 2022 were notably significant, amounting to 476 billion yuan ($66.36 billion) and 105.9 billion yuan ($14.76 billion), respectively.

The bankruptcy filing was signed by Jimmy Fong, who designated himself as a “foreign representative” of China Evergrande Group. As was reported by CNBC, a meeting involving “scheme creditors” is scheduled for Wednesday at the Hong Kong office of Sidley Austin, the U.S.-based law firm representing Evergrande. The development further underscores the ongoing turmoil and uncertainty surrounding China’s property sector and its broader economic implications.