TAIPEI, TAIWAN—Foxconn Technology Group Chairman Terry Gou announced Monday that the iPhone will go into mass production in India this year, a shift for the largest assembler of Apple Inc.’s handsets that has long concentrated production in China. Apple has had older phones produced at a plant in Bangalore for several years, but now will expand manufacturing to more recent models. Bloomberg News reported this month that Foxconn is ready to start trial production of the latest iPhones in the country before it starts full-scale assembly at its factory outside the southern city of Chennai.
India has become the fastest-growing smartphone market in the world, while China stagnates and Apple loses share to local competitors such as Huawei Technologies Co. and Xiaomi Corp. Apple has been a minor player in India, in part because of its high prices, but local manufacturing would help the Cupertino, California-based company avoid import duties of 20 percent.
“For Foxconn, the China market for iPhones is saturated, and labor costs are three times higher compared with India,” says Karn Chauhan, a Gurgaon-based analyst at Counterpoint Research. “India is still an emerging smartphone market, it has a lot of potential domestically and could serve as an export hub for the region.”
Foxconn already has two assembly sites in the southern Indian states of Andhra Pradesh and Tamil Nadu, where it makes devices for Xiaomi and Nokia. Locating more production in India would help diversify Apple and Foxconn’s manufacturing footprint away from China amid ongoing trade tensions with the United States
The Indian assembly line of Foxconn’s Hon Hai Precision Industry Co. would serve local and export markets by the time Apple announces its next iPhone models in September, say people familiar with the matter. The Taiwanese contract manufacturer, the biggest maker of iPhones, will initially invest about $300 million to set up for Apple with investments to ramp up as capacity expands.
Producing phones locally would also help Apple’s retail push in India. The company needs to meet a 30 percent local sourcing rule to be able to open its own stores in the country. Indians bought more than 140 million smartphones last year, with just 1.7 million sold by Apple, as consumers favored cheaper models from China.