Inside Apple's India dream
Tech giant aims to move at least 20% of iPhone production to India as it accelerates away from China

Apple's suppliers in India, including Kevin's company, which makes the new iPhone 15 series, are being asked to make over 15 million iPhones in India this year -- more than double the goal a year ago, Nikkei Asia has learned. It is all part of a tectonic shift in Apple's manufacturing supply chains.

But the era of exclusive dependence on China is ending -- both for political and commercial reasons. Earlier in 2023, Apple told suppliers to prepare to build at least 20% of total iPhone annual production in India in the coming years, sources briefed on the matter told Nikkei. The proportion currently stands at less than 10%.

Most important of all, Apple wants to bring crucial new iPhone product development resources to India from China. That involves thousands of engineers and the establishment of numerous new laboratories.

The Zhengzhou incident made clear to Apple executives that the docile workforce and efficient plants they have counted on for two decades can no longer be guaranteed. Apple decided it would need to move more of the iPhone supply chain out of China, just as India was coming into view as the alternative.
 
"The situation was much worse than the onset of the pandemic -- much worse than the Shanghai lockdown. This was the biggest crisis ever," a supply chain executive told Nikkei.

Ultimately, the Apple dream for the Indian market is not just to increase market share and increase production, but to make it a sustainable alternative to China, several Apple supplier executives believe. Apple will allocate the so-called New Product Introduction (NPI) of iPhones to India in the coming years, people with direct knowledge told Nikkei.

"In the years to come, we will see an iPhone that is codesigned in India," another person closely involved said.

Foxconn to invest $600 million in India to make iPhone components, chipmaking equipment

Taiwan's Foxconn will invest $600 million in two projects in Karnataka state in southern India to make casing components for iPhones and chip-making equipment as it spreads its bets beyond China.
 
Some $350 million will go towards setting up the iPhone component facility which will generate 12,000 jobs, while Foxconn will tie up with Applied Materials in a $250 million project to make chip-making tools, Karnataka state said in a statement.

Foxconn has also plans to apply for incentives under a $10 billion scheme by India government to promote chip manufacturing, and is in talks with Gujarat to set up a chipmaking facility in the western state.

China should encourage its citizens to join counter-espionage work, including creating channels for individuals to report suspicious activity as well as commending and rewarding them, the state security ministry said on Tuesday.
 
A system that makes it "normal" for the masses to participate in counter-espionage must be established, wrote the Ministry of State Security, the main agency overlooking foreign intelligence and anti-spying, in its first post on its WeChat account, which went live on Monday.

Shanghai Micro Electronics Equipment Group, the Chinese leader in so-called lithography gear that’s been blacklisted by the US, is working to deliver its first system based on 28-nanometer technology later this year, local newspaper Securities Daily reported on Monday, citing an unnamed source. Optical components maker Mloptic Corp. gained as much as 15%, while peers Kingsemi Co. and Castech Inc. each advanced around 5% on Wednesday morning.

ASML is the global leader in lithography machines, and gear that can support 28 nm chips is essential to making silicon for a spectrum of products from electric cars to missiles. The Netherlands, home to ASML, has joined a US-led effort to curb Beijing’s chip ambitions by banning the Dutch supplier from selling advanced chipmaking machines to China.

TSMC became the first foundry to provide the world's first 28nm General Purpose process technology in 2011 and has been adding more options ever since

Now Shimao Group has released its financial results after a 16-month delay and various threats to delist the company. It posted a 48.6 billion yuan loss ($6.8 billion) over two years of trading, and today – after trading in its stock resumed for the first time since April 2022 – shares in the troubled firm fell by 67%.  
 
Shimao's stock price decline is its biggest on record and is symptomatic of a wider crisis facing the sector. Last month, Evergrande, China's largest developer, announced a whopping $81 billion two-year loss – a figure almost triple the GDP of Iceland. The firm hit the headlines back in 2021 when it defaulted on its debt pile – an event that reverberated through global markets and had wide-ranging consequences on the Asian nation's property sector.

Property sales by floor area fell 28.1% in June from a year ago, marking the largest drop of the year and even worse than May's 19.7% decline, according to a recent report by Reuters. A fall in house prices, a drop in construction starts, and a fall in real-estate investments have all heaped misery on the homebuilding industry.  
 
The property sector makes up around one-fifth of China's GDP and its decline has dragged down second-quarter growth for the country, which rose 6.3% from a year ago. This was well below the 7.1% forecast among economists.

China's economy may not surpass the US, per Bloomberg:

Chinese auto brands are on track to account for just over 50% of the cars sold in their home market this year thanks to a growing dominance in electric vehicles, consultancy AlixPartners said on Wednesday.

China passed Japan as the world's largest auto exporter in the first quarter of this year.

Dyer forecast annual sales of Chinese-branded cars in overseas markets would grow to 9 million vehicles by 2030. That would give Chinese brands 30% of global share and a market share of 15% in Europe, 19% in South America and 19% in South East Asia and South Asia.

Foxconn has rapidly expanded its presence in India by investing in locations in the south of the country for its manufacturing facilities, as the Taiwanese giant seeks to move away from China.

Foxconn, the leading contract manufacturer of electronics, already has an iPhone factory in Tamil Nadu, which employs 40,000 people.

APPLE ASSEMBLY
Foxconn plans to make casing components for iPhones at a new Karnataka facility with $350 million in investment that will generate 12,000 jobs.
 
It also won an order to make AirPods for Apple (AAPL.O) and plans to build a factory in India to produce the wireless earphones, two people with direct knowledge of the matter told Reuters in March.
 
CHIP-MAKING TOOLS
Foxconn said on Wednesday it will tie up with Applied Materials (AMAT.O) for a $250 million project to make chip-making tools in Karnataka, creating jobs for around 1,000 people.
 
MOBILE COMPONENTS
Foxconn has signed a deal on Monday with southern state of Tamil Nadu to invest 16 billion rupees ($194 million) in a new electronic components manufacturing facility that will create 6,000 jobs.
 
CHIP-MAKING
Foxconn is in talks with Prime Minister Narendra Modi's home state Gujarat over a semiconductor plant, a top government official told Reuters last month, days after the Taiwanese giant broke off a $19.5 billion joint-venture plan with India's Vedanta (VDAN.NS).
 
ELECTRIC VEHICLE
Foxconn's venture to attempt to build a standardised electric vehicle platform is targeting India or Thailand for the production of a small battery-powered car under development, the unit's chief executive told Reuters.

India's Modi unlikely to travel to BRICS summit:”One Indian gov official said there is growing discomfort in New Delhi about being part of groupings like BRICS, SCO which China dominates, especially as India inches closer to the US and other Western powers.”