- With the creation and release of the iPhone 15, India’s smartphone manufacturing industry has attained a significant milestone.
- This achievement begs the question of whether India is on track to compete with China in the smartphone manufacturing market.
- While India has achieved significant progress, many elements still distinguish it from China.
Why are we debating this?
- According to a new estimate, India has surpassed the 2 billion cumulative milestone in locally manufactured mobile phone shipments from 2014 to 2022, marking a 23% compounded annual growth rate.
- The increase in local manufacturing was spurred by high internal demand, rising digital literacy, and government support.
A Shift in iPhone Production
(1) Historical Context:
- Since 2017, iPhones have been built in India.
- Previously, India’s production lines trailed worldwide releases.
(2) The iPhone Breakthrough:
- The iPhone 15 was manufactured in Chennai, India, by Foxconn a month before its global release.
- This marks India’s entry into a parallel manufacturing market with China.
Comparing India and China
(1) Not Yet Equals:
- India’s progress is admirable, but it has not yet caught up with China.
- The base iPhone 15 is assembled in India, whereas Pro iPhones are still manufactured overseas.
- China’s well-established supply lines pose a challenge to India.
(2) The Challenge of Supply Chains:
- India’s supply chain operations are not as smooth as those in China.
- It is predicted that closing this gap will take at least two years.
Understanding Indian Smartphone Manufacturing
(1) High-Level Assembly:
- Imported key components include cameras, screens, and chips.
- India is primarily a high-level meeting destination.
- China’s fabs (chip and display facilities) on the other hand, provide a manufacturing advantage.
(2) Skill Development:
- Smartphone production is now extremely automated.
- The workforce in India is being trained to operate complex assembly lines.
- Apple’s decision to not produce Pro iPhones in India is influenced by supply chain concerns.
Pricing Dynamics and Future Prospects
(1) Pricing Paradox:
- In comparison to China, India is not naturally a cheaper manufacturing site.
- Apple’s iPhone sales in India are increasing by over 40%.
- Because of its continuous expansion, Apple does not need to cut its prices.
(2) Potential Price Revisions:
- India has a pricing disparity with the United States and the United Arab Emirates.
- Price increases may be required once iPhone shipments hit 10 million devices per year.
India’s lacunae
(1) High-End Manufacturing:
- India intends to be a hub for high-end smartphone and electronics production.
- However, given to the country’s minimal volume in this category, this goal is a long way off.
- Firms would need to export roughly 500 million units each year to make this transformation viable, which appears to be a long-term goal.
(2) Semiconductor Fabrication:
- Semiconductor fabrication, a vital component of electronics production, is still out of reach for India.
- Companies are currently unable to relocate semiconductor fabrication to India due to a lack of scale and infrastructure.
@the end
- The fabrication of the iPhone 15 by India is a noteworthy breakthrough in smartphone manufacturing.
- While problems like as supply chain scale and worker upskilling remain, India’s success demonstrates the country’s ability to compete with China in the future.
- As smartphone sales continue to rise, pricing dynamics and local production may experience additional changes that benefit both the industry and consumers.
Source: https://m.economictimes.com/industry/cons-products/electronics/india-becomes-2nd-largest-mobile-manufacturing-nation-counterpoint/articleshow/102715599.cms#:~:text=India%20has%20become%20the%20second%2Dlargest%20mobile%20phone%20manufacturing%20country,with%20250%20million%20a%20year