Apple started production of its next-generation iPhone 15 in Tamil Nadu to further narrow the gap between its Indian operations and its main manufacturing base in China.

A factory of Foxconn Technology Group in Sriperumbudur is preparing to deliver the latest devices weeks after shipments from its Chinese factory begin, as the company seeks to quickly ramp up the number of new iPhones coming from India, people familiar with the matter said.

The Cupertino, California-based company is working on a multiyear project to move its manufacturing operations out of China to de-risk the supply chain for its most important products amid tensions between Washington and Beijing. Relationships make trade less predictable. India, under Prime Minister Narendra Modi, has sought closer ties with the United States and established itself as a manufacturing hub.

Before the iPhone 14, only a fraction of Apple’s iPhone assembly was done in India, which lags China’s output by six to nine months. Such delays have decreased dramatically last year, with 7% of Apple’s iPhones produced in India as of the end of March. The goal this year is to bring shipment times from India and China closer to parity, the people said, although suppliers have yet to determine whether that will be achieved. He asked not to be identified because the information is not public.

The scale of iPhone 15 production in India will depend on the availability of components, mostly imported, and the smooth start-up of production lines at Foxconn’s factory outside Chennai.

The new iPhone, likely to be released on September 12, is expected to be the biggest update to the device in three years. It will include major upgrades to the camera system across the range, and the Pro model will get an improved 3nm A16 processor. A new line of handsets will be crucial to reviving sluggish sales. Apple this month reported its third straight quarter of sales decline amid tepid consumer demand in key markets including the United States, China and Europe.

Other Apple suppliers in India — Pegatron and a Wistron factory acquired by Tata Group — will also soon assemble the iPhone 15, the people said.

A spokesman for Apple and a joint representative of Wistron and Pegatron declined to comment. Foxconn did not respond to a request for comment.

Apple has steadily expanded in India through its Taiwanese suppliers, benefiting from some financial incentives from the Modi government to bring in more high-end manufacturing. That helped Apple triple its iPhone production in India to more than $7 billion (Rs 58,221 crore) in the fiscal year ended March, Bloomberg previously reported.

Apple, which opened its first retail store in India in April, now sees the fast-growing Indian market as a retail opportunity and, in the long run, an important production base for its products. iPhone sales in India rose by double digits to a new high in the quarter ended June, though Apple has yet to disclose specific figures.

Apple CEO Tim Cook said after meeting Modi during a trip to India in April that he was “committed to growing and investing across the country”.

© 2023 Bloomberg

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