Apple should consider assembling iPhone Pro models in India. Here’s why

Over the past few years, India has transformed from being a mere smartphone importer into a significant hub for smartphone assembly. While Samsung has manufactured its latest flagship devices, including the Galaxy S23 Ultra, as well as the recently unveiled Galaxy Z Fold5 and Galaxy Z Flip5, in the country, its competitor Apple is also progressively ramping up its assembly operations in India. 

And for the first time since it started assembly in India, Apple is now striving to undertake the assembly of an upcoming iPhone model within the country, prior to its official launch. However, even now, Apple’s initial focus is on assembling the base variant—the iPhone 15—rather than its Pro models. Here’s a closer look at the reasons why Apple should contemplate expanding its assembly efforts to include the iPhone Pro models in India.

De-risking revenue loss & Supply Chain Resiliency: 

Upon the launch of the iPhone 14 Pro and 14 Pro Max in September of last year, these models experience a tremendous surge in demand. However, the widespread impact of COVID-19 restrictions and labour-related challenges at the manufacturing facility in China, where these smartphones are produced, had a significant effect. Apple encountered shortages in its stocks, leading to substantial financial losses for the tech giant. On November 6, 2022, Apple issued a statement stating, COVID-19 restrictions have temporarily impacted the primary iPhone 14 Pro and iPhone 14 Pro Max assembly facility located in Zhengzhou, China, and the facility was operating at significantly reduced capacity.

“Apple had everything lined up for its new flagship models, but just due to issues at the assembly site in China, millions of units of Apple’s flagship iPhone 14 Pro and Pro Max were not supplied in Q42022 (October-December). This resulted in over a $ 1 billion loss for every 1 million iPhone 14 Pro or Pro Max not shipped due to short supply,” explains Danish Faruqui, CEO, Fab Economics – a semiconductor ecosystem consultancy firm. Refraining from repeating the same mistake as last year, Apple should consider expanding its Pro model assembly outside of the existing facility in China. In this case, India offers a compelling option for iPhone Pro and Pro Max assembly at comparable OPEX and CAPEX cost structures of assembly operations he adds. 

Establishing Technology Lead:

The upcoming iPhone 15 Pro and Pro Max models will sport A17 Bionic, which is fabricated on TSMC 3nm (N3B) technology node. For the first time, Apple will outpace all its competitors in semiconductor technology included in its product as most competitors are using Snapdragon 8 Gen 2 in their 2023 leadership products (which is fabricated on TSMC 4nm (N4P) technology node). As Apple has a clear competitive advantage in 2023 of a generational lead ahead of its competitors in the most critical component of iPhones, therefore it must have a robust supply chain strategy to ensure delivery to the end customer. “After leading the race across Semiconductor Chip Design, Fab, Chip Assembly and Test value chain, it will be not a desired outcome for Apple for not being able to supply to its customer its leadership Apple’s iPhone 15 Pro and Pro Max models in Q4 2023 due to assembly being concentrated in one country,” explains Faruqui.  

US-China Chip tensions:

Tension has been escalating between the United States of America and China. In October 2022, the US prohibited American citizens and companies from working with Chinese semiconductor companies operating in the production of advanced chips without a special export license. In retaliation, China too has limited import of gallium and germanium, along with associated chemical compounds essential for chips. This will only intensify further. Faruqui adds, “The US department of Commerce, across various sanctions applied by the Bureau of Industry and Statistics, have geared towards moving the leading edge across logic, memory, analog and more, away from China. The overall direction is to diversify the leading-edge product value chain away from just China. Indian assembly of the iPhone Pro models sporting the most cutting-edge semiconductor technology (3 nm) will be a step forward in China-plus-One strategy for Apple that is in line with the broader direction of de-risking supply chains of strategic importance from China as pushed by the US government.”

Given the possible challenges that Apple may face in the near future, the Cupertino giant should consider assembly of the upcoming iPhone 15 Pro models in India as well. While the industry leaders are confident about this move happening soon, sources close to Apple told Business Today that the company has no immediate plans to assemble the iPhone 15 Pro models in India. 

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