Apple iPhone production in India shuts down due to dispute with China
UPDATE: Reuters reports this morningthat the logjam in India that prevented contract manufacturer Foxconn from receiving shipments of smartphone parts from China is over. This should lead to the resumption of iPhone production in India.
Battles along the India-China border last month left 20 Indians dead, and as we told you at the time, negatively impacted iPhone production in and shipments to India. Indian authorities were blocking shipments from China into India. This left Apple iPhone components held up at Indian ports and a lobby group representing U.S. companies in India wrote the country's commerce minister to state that holding up shipments from China could dissuade U.S. firms from doing business in the country.
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Foxconn employees in India basically sat on their hands all week
According to Reuters, India continues to make things difficult and is still blocking exports from China. Three sources inside India told Reuters that because Apple contract manufacturer Foxconn cannot receive supplies to its two factories in South India, hundreds of Foxconn employees had no work to do this week. Apple started manufacturing certain iPhone models in India starting with the OG iPhone SE. It now makes newer phones like the iPhone XR in India; by producing handsets in India, Apple is able to keep the country from imposing an import tax on them. Keeping the price of these phones down is important to the average Indian consumer; while it is the second-largest smartphone market in the world, India remains a developing country and for the most part, consumers there need to limit their phone purchases to low and mid-range models. Saving $100 to $200 by avoiding an import tax is a big deal to consumers in the market.
Phones like the Samsung Galaxy A10 could be a big beneficiary of this squabble
More than 150 shipments to Foxconn's Indian facilities from its factories in China said to contain smartphone and other electronic parts, have been stuck at the port of Chennai and some are being cleared now. The manufacturer's two plants in India are located in Tamil Nadu and Andhra Pradesh state. Besides assembling certain Apple iPhone models in the country, the factories assemble some Xiaomi handsets; the latter's value for money pricing plays very well in India. The plants have thousands of Indians on the payroll and many of them live in accommodations provided to them by Foxconn.
One source discussing the matter with Reuters said, "Foxconn was in a very bad state ... lots of workers stayed at the dormitory because there was no work." Meanwhile, the Indian foreign ministry did not respond to a request by Reuters for a comment. Two ministry officials did say that the extra scrutiny given all shipments imported into India are only temporary and will soon come to an end. One official in India said, "We cannot keep checking 100% of shipments forever ... Shipments of non-Chinese companies being impacted will be cleared on priority." Interestingly, customs has held back these shipments without a formal order.
The delays to imports from China are hitting India at a time when the supply chain is still impacted by the coronavirus. U.S.-India lobby groups are asking the government to intervene. Today, China's commerce ministry said that it hoped that India would stop its discriminatory action against Chinese companies ASAP. The country recently banned 59 Chinese apps including wildly popular short-form video app TikTok.
As the planet's second largest smartphone market, the border battle between the two countries might have a negative impact on some of the top Chinese smartphone brands in India. Xiaomi's 30% slice of the Indian smartphone phone might not be hurt that much because the brand delivers handsets at a good price and with good specs. Samsung could be the biggest beneficiary of this squabble since it is not a Chinese brand and the Galaxy A models feature viable cameras and long battery lives at a very reasonable price. The Samsung Galaxy A10 with 2GB of memory and 32GB of storage is priced at the equivalent of $109 USD.
For now, production of iPhone models in India are held up by this dispute as Foxconn employees get an extended vacation.