Apple to Start Making iPhone Units in India, Minister for IT/Biotech Confirms

Apple iPhone India manufacturing

Although Apple did not give any confirmation of the plan, Priyank Kharge, State Minister for Information Technology and Biotechnology, has stated that Apple will begin iPhone manufacturing at a facility in India by April this year.

The factory, which will be set up by Taiwanese company Wistron Corp., is expected to open in the State of Karnataka, of which tech hub, Bangalore, is the capital.

Making iPhones in India will help Apple bring device prices down by a considerable margin because current regulations state that the company has to source at least 30% of its components locally. In addition, local labor and cheaper operating costs will help them retain their high margins on iPhones.

According to the minister, Apple intends to begin with assembling iPhones here in India, and move into manufacturing at a later time.

At this time, Apple has said nothing more than that it is keen to “invest heavily” in India. But if the minister has already confirmed the news, all that remains now is to set up an assembly unit at the designated location.

Apple has been in extensive talks with central and state officials regarding concessions for bringing iPhone making to India, and there could be a press release from Apple very soon about the India facility.

SEE: Why Apple is Preparing to Launch an iPhone Attack on India’s Smartphone Market

This is strategically a big change for Apple. So far, Apple’s manufacturing needs have primarily been met by Chinese and Taiwanese companies. With the entry into India, the Karnataka facility could signal the start of a very lucrative period for iPhone sales in the Asia Pacific region.

The real question everybody is itching to ask is this: what kind of price reduction will Apple be able to achieve on iPhone units if it is making them in India – or at least assembling them there to begin with? That’s the purpose of this whole exercise, after all, right?

And that price point will play a critical role in helping Apple tap into the Indian market, where the average mid-range smartphone costs about $150 to $200, with prices upwards of $1100 for the iPhone 7 Plus. The premium segment starts at around $450, so the closer Apple can get to this price range, the bigger its potential market in India.

Though iPhone is undoubtedly the king of premium smartphones, its market is limited to about 2% of the entire smartphone market. If Apple can bring the iPhone price down significantly by making them in India, that’s a huge multi-billion-dollar opportunity for them right there.

Apple witness a softening of device demand in fiscal 2016, and this has possibly opened up their eyes to the very real threat of lackluster sales for iPhone for the very first time. That’s something they haven’t seen since iPhone was launched ten years ago, and the sudden slow down across devices must have been a wake up call.

Everything in that part of the world hinges on Apple’s ability to put every possible cost-saving measure into the iPhone so it can compete across a much wider market in one of the fastest-growing economies in the world.

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