Extensive fire damage at the Tata Group’s Apple iPhone components factory in southern India could threaten production ahead of a surge in sales during the holiday season, an industry watcher and a source said, forcing the U.S. company’s suppliers to source critical parts from China or elsewhere.
A fire over the weekend caused an indefinite shutdown of production at Tata’s Hosur plant in Tamil Nadu, India’s sole supplier of iPhone back panels and some other parts to the country’s contract manufacturer Foxconn and its own iPhone assembly at another plant.
Hong Kong-based Counterpoint Research told Reuters it estimates local sales of 1.5 million units of the iPhone 14 and 15 models during the Indian holiday season that runs from late October to early November, with Apple struggling to meet even 15 percent of that demand. to the fire.
“There will be a 10-15 percent impact on manufacturing older iPhone models from India. Apple could neutralize that impact by importing more components and diverting more export inventory to India,” said Neil Shah, co-founder of Counterpoint, which has tracked Apple’s global shipments for years. .
Apart from local sales, Tata, one of India’s largest conglomerates, also exported iPhones to the Netherlands and the United States, as well as some parts to China, worth a total of more than $250 million (roughly Rs. 2,095 crore) in the year to August 31, data show. commercially available customs data.
Dad declined to comment.
Apple suppliers typically have backplanes in stock in three to four weeks, Counterpoint said. An industry source with direct knowledge of the matter estimated, however, that Apple is likely to have inventory in eight weeks, and therefore will not see an immediate impact.
However, they added that if the production suspension continues, the US company may set up another production line in China or add shifts there to provide parts for Indian iPhone makers.
Supply chain disruptions have generally cast a shadow over Prime Minister Narendra Modi’s push to attract foreign investors to “Make in India”, particularly in the electronics sector.
Apple is diversifying outside of China, but last year separate fires in India caused suppliers Foxlink and Pegatron to briefly shut down operations, and authorities found that much of the fire-fighting equipment at Foxlink’s facility was not functional. Contractors Wistron and Foxconn have also been hit by labor unrest in recent years.
“These are temporary problems,” said Prabhu Ram, vice president of Cybermedia Research. “Continued efforts to improve safety and operational standards are critical to strengthening India’s position as an emerging global electronics manufacturing hub.”
Tata is among Apple’s latest suppliers in India, which analysts estimate will contribute 20-25% of total global iPhone shipments this year, up from 12-14% last year.
The plant affected by the fire employed 20,000 workers. Another unit at the same Tata complex was due to start manufacturing complete iPhones later this year and it is not clear whether the incident will cause a delay.
Tata has another iPhone factory near Bengaluru, which it bought from Wistron last year, and another plant in Tamil Nadu near Chennai, which it plans to buy from Pegatron.
© Thomson Reuters 2024
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