Foxconn plans to assemble iPads in India, expanding operations beyond iPhones

Foxconn is exploring plans to assemble Apple’s flagship tablet, the iPad, in India. This would be a significant expansion from its current operations, which focus on manufacturing iPhones. The Taiwanese contract manufacturer may begin assembling iPads at its Sriperumbudur, Tamil Nadu facility, demonstrating confidence in India’s rapidly expanding supply chain for Apple’s iconic products.

To date, India-based units of Foxconn and other global manufacturers have only assembled Apple smartphones. Sources familiar with the matter have indicated that Foxconn is seriously considering starting iPad assembly at its Tamil Nadu facility.

Discussions with the government have reportedly been positive, and Foxconn plans to significantly increase its production capacity over the next few years, including for iPhones, iPads, and other products.

While the assembly of Mac laptops may take more time due to smaller production volumes, Apple’s plans to expand the portfolio of products assembled in India align with its strategy to diversify away from China. Last year, Apple had already shifted a portion of its iPad production to Vietnam.

Industry experts point out that the capabilities required to produce an iPad are similar to those for smartphone assembly. An industry source commented that the iPad is a larger iPhone so that it can be assembled in India without too much trouble. Apple’s contract manufacturers are already well-equipped to manage such functions.

According to Taiwanese research firm Isaiah Research, BYD’s facility in Phu Tho, Vietnam, began assembling iPads in the second half of 2022. Estimates suggest that Vietnam accounts for about 5-10% of all iPad assembly. Additionally, Foxconn has set up production lines in Bac Giang, Vietnam, to start assembling MacBooks.

Expanding iPad production in India is primarily aimed at diversifying supply chain risks. Additionally, targeting the domestic market in India is also a consideration. Annual iPad shipments are estimated to reach 49 million this year, a year-over-year increase of 4.5%.

Foxconn will benefit from India’s production-linked incentives (PLI 2.0 for IT Hardware), which include tablets, as it aggressively increases its investments in the country. In June, it was reported that Foxconn is looking to start manufacturing AI servers at its Sriperumbudur plant. Google is also in advanced talks with Foxconn to produce Pixel smartphones using the same facility.

In February, Foxconn announced plans to spend INR 1,200 crore to build a factory on company-owned land. It is also constructing a mega factory outside Bengaluru, which is expected to primarily produce iPhones. The company has announced an investment of US$37.2 million in partnership with IT major HCL Group to establish a chip packaging and testing facility in India, pending government approval.

While India has reached Completely Knocked Down (CKD) levels for iPhones, it is likely that iPads will initially start with Semi-Knocked Down (SKD) before reaching CKD levels, according to an industry source. SKD refers to a manufacturing and trade practice where a product is partially assembled before being exported, while CKD involves shipping the product in a completely disassembled state.

Experts have noted that Apple was initially hesitant about manufacturing iPads and MacBooks in India due to previous conflicts with government restrictions on its collaboration with BYD. The company’s attempt to partner with BYD to make iPads in India faced challenges due to geopolitical concerns.

The recent reduction of the Basic Customs Duty (BCD) in the Budget from 20% to 15% on components is also expected to expedite domestic manufacturing plans. If these plans materialise, Foxconn will likely start assembling iPads in the second half of next year.

Source: Economic Times