Manufacturing experience is hard to make up. Apple's expansion has been blocked, and Foxconn has been accused of recalling hundreds of engineers from Chinese Mainland from India
Just as the production of iPhone 17 is about to begin, Apple's plan to expand production on a large scale in India has once again been hindered. According to Bloomberg, Foxconn Technology Group has recalled about 300 engineers from an Indian factory in Chinese Mainland, which may once again put the resilience and capability of Indian manufacturing industry to a severe test.
How will it affect the production of Apple iPhone?
According to the Economic Times of India, Foxconn withdrew engineers from factories in Tamil Nadu of Yuzhan Technology, its component subsidiary, for the second time in recent months. On July 2, it was reported that Foxconn had recalled a similar number of engineers and technicians from its iPhone factory in India in Chinese Mainland. According to reports, Yuzhan Technology Factory produces metal casings and display modules for old iPhone models, and has not yet produced phones for the latest iPhone 17 series. This factory was just put into operation a few months ago, and the mobile phone screens assembled here still rely heavily on imports.
It is currently unclear why the Foxconn engineers mentioned above were removed, but sources warn that although most of the equipment installation and initial training have been completed, sending these experts back to their home country may reduce the factory's production efficiency. According to informed sources, Foxconn has started airlifting Taiwanese engineers to fill the vacancies.
Multiple media analyses suggest that currently, Apple can increase its import efforts for display screens and rely on other local suppliers to provide casings. However, the loss of experienced employees in Chinese Mainland may weaken the efforts of the American technology giant to quickly localize its supply chain in India. "Tech in Asia" said that the withdrawal of senior technical personnel from Chinese Mainland may delay Apple's localization process again, because replacing decades of accumulated manufacturing experience requires a lot of time and resources, and even enterprises of Apple's size are difficult to make up quickly.
Apple's Chief Financial Officer Kevin Parek has previously warned that tariffs will increase costs by $900 million in the third quarter of 2025. Although the company's strong cash flow provides a buffer, the continued interruption of business in India may further erode gross profit margins.
Supply chain diversification has been proven to be more complex than expected
In recent years, Apple has continuously expanded its local assembly, engineering, development, and testing businesses in India to promote a diversified supply chain layout strategy. According to Reuters in April, Apple plans to shift all iPhones sold to the United States to be produced in India to mitigate risks associated with tariffs and geopolitical tensions.
However, the transfer of the supply chain is far more complex than imagined. The Wall Street Journal reported earlier this month that Apple's expansion in India not only involves the transfer of existing production capacity, but also needs to work with multiple suppliers to build a new manufacturing ecosystem, new infrastructure, new labor training and policy support, so as to reach the level of industrial coordination achieved by Chinese Mainland in the past decades.
The recent situation has also exposed the "friction" faced by Indian suppliers in the early stages of expansion. According to the analysis report of "AInvest", the recall of engineers from Chinese Mainland by Foxconn from India exposed the vulnerability of Apple's supply chain in India. Delays in local engineer training or integration of new manufacturing processes may lead to production bottlenecks, ultimately affecting Apple's ability to demand in key markets, and also warned against the risk of overestimating the difficulty of decoupling the supply chain.
Labor issues continue to pose concerns. Apple CEO Cook once praised the skills and expertise of assembly workers in Chinese Mainland, emphasizing that this is the key reason for the company to set up most production lines in China, not just the more favorable costs. The Indian Business Standard said that in order to expand production capacity, Foxconn sent many experienced engineers from Chinese Mainland to speed up production and train Indian workers. Bloomberg said that management talents in Chinese Mainland played an important role in training local employees and quickly putting production lines into operation. India only began mass assembling iPhones four years ago.
According to foreign media reports, industry observers have pointed out that although India's mobile phone exports have surged, the phenomenon of excessive reliance on imported foreign labor from Vietnam and other places in the production process has raised concerns about labor standards and exploitation.
India is catching up, "The Wall Street Journal reported, stating that India has upgraded its infrastructure and launched a manufacturing subsidy program, successfully promoting the development of the smartphone manufacturing industry. Each state has also introduced its own incentive measures to attract Apple's suppliers and other technology manufacturers. But there is still a long way to go before mature industrial clusters (with equally dense component suppliers and logistics systems) can be formed in India. The report quoted the research on the information disclosed by Apple's suppliers by Chris Miller, a professor at Tufts University in the United States, and found that companies headquartered in Chinese Mainland dominate in the field of precision manufacturing. As of fiscal year 2023, of Apple's 187 top suppliers, more than 150 have factories in Chinese Mainland, while only 14 have factories in India.
Still facing resistance from the 'Made in America' plan
In addition to its own economic factors, India also needs to consider the complex geopolitical factors it faces in its operations. Liu Zongyi, Director of the South Asian Studies Center at the Shanghai Institute of International Studies, stated in an interview with Global Times on the 25th that although Sino Indian relations have eased, structural contradictions still exist. In addition, the problems exposed in the transfer of fruit chains to India are common problems encountered by investment enterprises, such as supply chain fluctuations, worker technical level issues, attendance issues, labor rights requirements, worker "heritage", land acquisition difficulties, etc. Indian suppliers need to prepare contingency plans in advance.
Liu Zongyi added that Apple products produced in India are mainly aimed at the European and American markets, and US President Trump has made it clear that he hopes Apple will produce iPhones in the United States. Therefore, the expansion of the Indian fruit chain will also face resistance from Trump's "Made in America" plan. Therefore, how to maintain the resilience and production efficiency of the supply chain in the geopolitical tide will be a question that Indian suppliers and India need to consider.
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