Apple moving from China to Chennai as India competes with Vietnam for manufacturing AirPods and iPhones

India has come a long way from China-made cheap phones flooding markets a decade back, to becoming the world’s second-largest mobile handset manufacturer. Even as the Chinese brand Xiaomi continues to dominate sales in India, the country delivered three crore phones made in local factories in 2020-21. India’s proven production capability has caught Apple’s attention, as the iPhone maker is diversifying the production of its premium handset and accessories out of China.

India strikes a chord with Apple

With an eye on sourcing 25 per cent of iPhones from Indian factories by 2025, Apple is also reportedly asking suppliers to manufacture AirPods and Beats headphones in the country. The plan has come to light when Pegatron has become the third iPhone manufacturer to start production at a factory in Chennai. On the other hand, Foxconn’s Indian partner Vedanta has announced intentions to create an iPhone manufacturing hub in Maharashtra after laying the foundation for a chipmaking facility in Gujarat. India’s steel to aviation behemoth Tata has also joined the race to become the first Indian iPhone maker by forming a partnership with Taiwan-based Wistron.

Syncing up with Apple’s major revenue stream

The move to shift AirPod manufacturing to India is significant, because accessories and wearables constitute almost 10 per cent of Apple’s sales revenue. The premium audio accessory is also bringing in $12 billion a year for Apple, which alone is higher than the overall revenue of firms such as Spotify or Uber. Reports also suggest that Foxconn is also on board for making Beats in India, to pave the way for AirPods to follow.

Vietnam a key regional rival

Another Chinese supplier for Apple, Luxshare is reportedly keen on manufacturing AirPods in India, but is currently prioritising rival Vietnam for its operations. An analysis by JP Morgan shows that while Apple is scaling up manufacturing for iPhones and iPads in Vietnam almost at par with India, the brand wants to source 65 per cent of AirPods from Vietnam.