February 24, 2024

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Apple wants the batteries for its latest generation iPhones to be made in India, part of the US tech giant’s efforts to diversify its global supply chain and move manufacturing out of China.

According to two people close to Apple, the world’s most valuable company has informed component suppliers about its preference to source batteries for the upcoming iPhone 16 from Indian factories.

Battery makers such as China’s Desei have been encouraged to set up new factories in India, while Taiwanese battery supplier Simplo Technology for Apple has been asked to increase production in India for future orders, three people familiar with the situation said. Has gone. ,

“If everything goes well with iPhone 16 battery supply, Apple is planning to shift more iPhone battery production to India,” said one of the people close to the company.

Separately, an Indian government minister this week said TDK, a Japanese supplier to Apple, is setting up a 180-acre facility in Manesar in Haryana state to make battery cells that will be used in Indian-made iPhones. In a post on Twitter, Minister of State for Electronics and IT Rajeev Chandrashekhar congratulated Apple, TDK and local authorities for enabling the government’s “deepening of goals”. [the] Electronics Manufacturing Ecosystem in India”.

TDK said it “has started construction of a plant in India for part of the battery production” and plans to start in 2025.

Companies like Dessay and Simplo package the power cells produced by TDK and their counterparts into modules and ship them to assemblers like Foxconn.

Amid rising trade tensions between Washington and Beijing, Apple is trying to reduce its years-long dependence on China for its manufacturing and supply chain.

In recent months, the iPhone maker has sought to steadily increase production in Vietnam and India, but has struggled to replicate the scale, speed and, in some cases, quality of its Chinese operations.

The latest effort to source batteries from outside China is in line with the Narendra Modi government’s “Make in India” manufacturing drive, which provides incentives to companies willing to invest in mobile phones, batteries and other targeted sectors.

Apple made its latest iPhone 15 in India and China at plants run by Taiwanese contract manufacturers Foxconn, Pegatron and Wistron, which is selling its mobile phone plant outside Bengaluru to India’s Tata.

Apple’s largest supplier, Foxconn, is planning to invest more than $1.5 billion for a new production facility in India, according to a recent announcement by the company.

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Industry experts and local officials said Apple’s suppliers still face hurdles in expanding production in India.

Following deadly clashes between Indian and Chinese troops in and around the Galwan Valley in eastern Ladakh, the country in 2020 imposed strict rules on foreign investment from countries with which it shares borders. As part of that policy, foreign investment from these countries must first obtain approval from the central government.

India is looking for foreign investment to strengthen its economy and compete in sectors such as electric vehicles and semiconductors. However, its efforts to attract funds from abroad for industries such as electronics clash with its tough stance on China.

India last year allowed Apple’s Chinese component suppliers to set up operations only after securing a local joint venture partner.

A worker at the mobile phone plant of Rising Stars Mobile India, a unit of Foxconn Technology in Sriperumbudur, India

Foxconn’s Chinese rival Luxshare failed to win Indian government approval for an expansion plan and instead announced a $330 million expansion in Vietnam, according to a local official.

Shenzhen-based battery maker Sunvoda runs a factory in Uttar Pradesh outside Delhi that supplies batteries for Apple, which it set up before the government banned Chinese investment.

DESAI, a Chinese company that has been supplying iPhone batteries for years, may face hurdles in setting up new facilities in India, according to local officials and industry insiders.

“We’ve heard about Dese [expansion in India], but I don’t think that’s happening. The Chinese are facing problems,” said a local official, speaking on condition of anonymity.

Evan Lamm, an analyst at Counterpoint, said being able to build factories in India first was an “advantage” for battery makers. “If the quality is satisfactory, Apple gives preference to those who have factories in India,” he said.

Apple, Desay, Simpleo and Luxshare did not respond to requests for comment.

Additional reporting by Michael Acton in San Francisco and David Keohane in Tokyo

Source: www.ft.com

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