If Apple’s Made in India desire is already a reality, the ramp-up (volumes, quality, variety) of production will take longer than in China. In question: a very different sense of business and a delay of the sub-continent in several areas such as infrastructure or quality control. Delays of which the government is aware and in which it is investing heavily.
During a call with Apple investors last month, Tim Cook uttered the word fifteen times ” India “. The subcontinent, which is about to overtake China in terms of number of inhabitants, is indeed a new priority for the designer of the iPhone and other MacBooks. As much for its economic development potential as for limiting Apple’s incredible dependence on Chinese industrial tools. The Cupertino giant is in the process of discovering that doing business in India remains an adventure… which is not really easy!
Read also : Apple is accelerating its effort to reduce its dependence on Chinese factories… And India should be the big winner of this maneuver. (December 2022)
Because, unlike the “homogeneous” side of the Middle Empire, India is a complex territory, made up of multiple ethnic groups, languages, religions, cultures, etc. Elements that make business much less easy than in the workshop of the world.
Cultural, technological… and customs barriers!
One of the driving forces behind Apple’s development dynamic in India is the rise in Sino-American tensions. Ultra dependent on Chinese factories, Apple would risk (very) big in the event of a product embargo Made in Chinaa on US territory – and the unprecedented volatility of the Trump administration has proven that this eventuality is possible. If Apple has been producing iPhones since 2017 in India, the company has recently accelerated its local development. After being content to follow Chinese production several months later, the Indian factories of Apple’s local partners (Tata, etc.) are now designing iPhones only a few weeks later. Better, they finally assemble high-end products.
Read also : An iPhone factory was ransacked in India (December 2020)
But an article from FinancialTimes explains that the major cultural differences between India and China are so many brakes for the rise of the first compared to the second. While, under the impetus of central and local governments, Chinese players threw all their might to meet all of Apple’s demands, the Indian world offers more… nonchalance. As noted by a former Apple engineer interviewed by our colleagues. ” There’s no sense of urgency “, as may be the case in China, he explained.
Another problem facing Apple and its supply chain is a lower quality chain, which means much lower returns. The article cites as an example the chassis and the hanger of the iPhone (the metal shell in which the smartphone is integrated), whose yield rate would be only 50% in Indian factories! Yields not only far from the zero defect ambitions of the Californian company – with which Chinese factories are beginning to flirt – but which above all limit the rise in production volume. Finally, sometimes erratic organizations, often poor infrastructure, unreliable supply chains and customs duties are all barriers to the rise of Apple in the country.
A country with strong industrial and electronic ambitions
This long list of limitations and problems should not obscure the fact that the situation is changing and improving from year to year. According to a prominent Indian Silicon Valley entrepreneur, Vivek Wadhwa, “ local governments (…) will do what China has done. […] Apple has now set foot (in India) and is learning what works and what doesn’t. Give them three years and you will see the rise “. The great motivation of Apple is not the only force that could be responsible for the take-off of India in the field of industrial production and new technologies. On the one hand, the country can count on certain software know-how, both in development and support. On the other hand, its links with Silicon Valley – many researchers, engineers, but also bosses are of Indian origin, such as Satya Nadella (Microsoft) or Sundar Pichai (Alphabet and Google) – are very strong.
Read also : Semiconductors: India bets on RISC-V and local factories to design its own chips (May 2022)
Added to this are several industrial policies. The various initiatives to launch the semiconductor production sector, or the reception programs, as here, for tech giants. But also energy projects – such as the EPR power plant project, by EDF, in Jaitapur – and major transport. Just yesterday, Air India signed a mega order for 250 Airbuses and 220 Boeings under the patronage of Indian President Narendra Modi. If Apple’s path in the country does not promise to be a long calm river, the cursors of political will and investments are all green.
FinancialTimes
