Apple Likely to Turn to China for iPhone Cases if Production Halt at Tata Plant Continues for Long

Tata Electronics’s Apple iPhone component plant in Hosur, Tamil Nadu, which caught fire on September 28, has halted the iPhone maker’s operations ahead of the festive season in India. The plant manufactured essential back panels and other components for iPhones. Although Apple has stock for nearly eight weeks, it is likely that the company will set up another assembly line in China to secure parts for India’s iPhone manufacturers if the suspension continues for long, Reuters reported. 

“There will be a 10-15 per cent impact on production of older iPhone models from India. Apple could offset that impact by importing more components, and by re-routing more export inventory towards India,” Neil Shah told Reuters. Neil Shah is co-founder of Counterpoint, which has tracked Apple’s global shipments for years. 

Additionally, the fire-hit plant employed nearly 20,000 workers, and the production halt is likely to impact them. 

“There has been an unfortunate incident of fire at our plant in Hosur, Tamil Nadu. Our emergency protocols at the plant ensured that all our employees are safe. The cause of the fire is under investigation, and we will take necessary actions to safeguard the interest of our employees and other stakeholders,” said Tata Electronics in a statement on Saturday. 

This event is a setback for Apple’s growing operations in India. As per a recent Economic Survey, India’s total contribution to Apple’s overall production has increased 14 per cent in the financial year 2023-24 from 7 per cent in FY23. Additionally, the operations of the iPhone maker went up to Rs 2 lakh crore in financial year 2023-24 from Rs 1.15 lakh crore in FY23. 

The Indian government’s effort to decrease the import of smartphones from China, coupled with the production-linked incentive (PLI) scheme, has given boost to Apple’s growth in both manufacturing and sales. The PLI scheme was launched by the government in 2020 to give a boost to domestic manufacturing capability.  

Moreover, the popularity of Apple products in India is revealed by its increased sales in the country. Its sales in India have gone up by nearly Rs 68,000 in FY24. At the same time, a gradual inclination of Android users in India is growing towards iOS. Appe’s share in India’s smartphone market, has risen from 2 per cent in FY18 to 6 per cent in FY24. 

Earlier in May this year, Apple’s CEO Tim Cook showed his optimism towards Apple’s future in India. “I see it as an incredibly exciting market and it’s a major focus for us,” said Cook in Apple’s earnings call.