The move is a step-up for the Cupertino-based company in building a parts ecosystem in India, where it has so far struggled to have a wide presence. “Flex is making battery packs for Apple… supplies have begun for iPhones to be sold in India, and for exports,” a senior industry executive who is aware of its plans said.
Apple did not respond to an email seeking comment.
The development also comes at a time when the Apple has, according to media reports, asked suppliers to shift 15-30% of their production from China to other countries amid an escalating trade war with the US.
Apple sources chargers from Salcomp, the Finnish company which is the largest player globally and which has made India a huge base over the past few years.
Chinese companies such as CCL Design, Yuto Electronics and Sunwoda Electronics supply packaging material and printing technology to the phone maker, industry insiders said. The companies have been named in Apple’s supplier list.
With Flex coming on board, the Macbook manufacturer has increased its supplier base in India to six, including large contract manufacturers, Taiwan’s Foxconn and China’s Wistron.
‘Step in Right Direction’
Foxconn and Wistron assemble iPhones in the country from separate plants in Chennai and Bengaluru, respectively.
Flex declined to comment. Salcomp, CCL Design and Yuto Electronics did not respond to ET’s queries as of press time, while Sunwoda Electronics could not be reached for comment.
“Apple’s India specific moves, including ramping up component production and manufacturing iPhones are part of its move to make India a prominent hub, and as a result of the ongoing trade war with China,” said Prabhu Ram, head of intelligence at Cybermedia Research.
Apple’s India journey, though, has been bumpy so far, with its market share currently hovering around 1% in volume terms and 3% by value, mainly due to a lack of demand for its historically expensive phones in a pricesensitive market flooded with affordable high-specification devices of Chinese players such as Xiaomi and OnePlus.
The company, however, appears to have re-calibrated its plans and is focusing on increasing revenue and profits from its premium devices — and not volume market share through sub-Rs 20,000 devices — besides new services, backed by a move to open its iconic super stores, and expanding local production capability of even high-end models and exports out of India, analysts said.
Apple’s plan to increase component sourcing from within India is a step in “the right direction” as it will increase local sourcing levels for the company, but battery packs contribute little to the value addition in iPhones since the component contributes to just about 1% of value of making the device, said Neil Shah, research director at the Hong Kong-based Counterpoint Research.
“The real value addition will take place when the assembly of printed circuit boards (PCBA) begins in India,” Shah added.
PCBA makes up for more than 50% of the production cost of a smartphone, and several players including Samsung, Xiaomi, Oppo, Vivo and Lava operating in India have already started assembling the component locally over the past few years.
With increased local sourcing, Apple may be able to meet requirements for setting up its retail stores under the Single Brand Retail Trade (SBRT) route, which was further eased last month.
According to the new rules, all procurements made from India by the SBRT entity for that single brand shall be counted towards local sourcing, irrespective of whether the goods procured are sold in India or exported.