Commentary: Apple’s iPhone factories won’t make India the next China

India now produces roughly one-quarter of all iPhones. That is a major shift in Apple’s global supply chain, which has traditionally relied heavily on China. Apple is building an alternative network to reduce its dependence on one country.

The Indian factories are concentrated near Chennai. Foxconn Technology Group is among the suppliers operating there. Production has also moved closer to Apple’s global schedule. With the iPhone 14, India’s production lag fell to two months, from six to nine months previously.

The iPhone 15 was the first Apple device built in India for Day One global sales. This progress shows that Indian factories are taking on more than basic packing. However, the article says India still imports many important components, so the country’s role remains significant but incomplete.

Final assembly is the last stage of putting a phone together. It can involve fitting ready-made parts into a chassis, connecting components, and packing the finished device. The article describes basic assembly as “screwdriver work” because it may add relatively little value when most parts arrive from elsewhere.

Higher-value manufacturing reaches deeper into production. Indian suppliers now plug electronics into circuit boards, assemble chassis, and mount components locally. Foxconn and other suppliers have moved from importing finished circuit boards to producing mainboards in India. These steps capture more of the phone’s production process.

The difference matters because deeper production can reduce imports and strengthen local capabilities. India’s trade deficit in phone components has narrowed, suggesting progress. Yet the country still lacks domestic production of several major parts, so its local value addition remains limited and dependent on imported technology and materials.

A continuing deficit means the value of relevant component imports remains greater than the value of exported finished phones. It does not mean Indian factories do nothing. It shows that a large share of each phone’s underlying value still comes from abroad.

The article identifies memory, processors, lenses, displays, and batteries as major missing domestic capabilities. It also notes that trade data is difficult to interpret because chips, cameras, chargers, and adapters can serve phones or other products. Even under several assumptions, India’s mobile-phone trade balance remained negative.

The picture is improving, but not complete. The gap between component imports and handset exports has narrowed under reasonable assumptions. Local mainboard production helped drive a US$2.1 billion turnaround in the trade balance between fiscal years 2025 and 2026. Still, India remains dependent on imported parts and state support.

The article names five important areas where domestic production remains insufficient: memory, processors, lenses, displays, and batteries. These parts make up much of a handset’s bill of materials, so importing them limits the value created inside India.

This dependence is different from simply importing packaging materials. A phone can be assembled and tested in India while its most technologically important or costly parts arrive from overseas. Indian suppliers have begun mounting components locally and producing mainboards, but those steps do not replace domestic chip, display, camera, or battery industries.

The result is a manufacturing base that is becoming deeper without being fully integrated. India’s component-import gap has narrowed, which suggests progress. However, the article warns that local value addition remains limited until these missing capabilities develop. It also says rising semiconductor prices could make imported phone parts more expensive.

Government subsidies have helped attract electronics factories and expand India’s role in the supply chain. They support localisation, employment, and investments such as local circuit-board and mainboard production. But they also create a substantial public cost, especially when domestic capabilities remain incomplete.

The article says taxpayers are probably still paying more than US$1 in subsidies for every additional dollar going to workers. That means the employment and industrial gains are not yet being achieved cheaply. Subsidies may be helping factories compete while they still import processors, memory, displays, lenses, and batteries.

If political support weakens or subsidies are withdrawn, localisation could become harder to sustain. India’s manufacturing progress would then be vulnerable to a loss of state backing. Public finances could benefit from a smaller subsidy burden, but factories and future investment might face pressure unless local production becomes competitive without such extensive support.

The article presents China as the established supply-chain base that Apple is hedging against by building an alternative in India. It does not provide a detailed historical explanation for why China developed a deeper electronics ecosystem than India. It therefore cannot support a specific claim about the causes of that difference.

The comparison with Vietnam is clearer. Sceptics point out that Vietnam, despite having a much smaller economy, exports more merchandise than India. They use that fact to argue that India’s Make in India programme may be more hype than industrial transformation.

The article offers a more balanced assessment. Indian factories are no longer merely packing boxes. They now mount components, assemble chassis, and produce some mainboards. Yet India still imports many core parts, and its phone trade balance remains negative. Its progress is real, but the manufacturing ecosystem is not yet fully developed.

Semiconductors are materials whose electrical properties can be controlled, and the chips made from them perform functions such as processing, memory, and communications. Phones depend on several kinds of semiconductor devices. The article mentions microchips and notes that they can also go into electric vehicles, solar panels, and smart meters.

Making advanced chips is much harder than assembling phones. It requires highly precise manufacturing, specialised equipment, complex designs, skilled engineers, reliable materials, and large, sustained capital spending. Tiny defects can ruin a chip, while production must meet demanding performance and consistency standards. These capabilities develop through deep industrial ecosystems, not simple assembly lines.

That difference helps explain why importing processors and memory limits India’s local value addition. India can increase assembly and mainboard work while still relying on overseas semiconductor suppliers. The article also warns that data centres are absorbing memory-chip capacity, making phone semiconductors more expensive.