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Comment by giobox | Hacker News Reader

Although this article paints this being about diversifying a China-heavy supply chain, Apple have been forced to ramp up manufacturing in India for many years now due to legislation that places enormous import taxes on selling products in India that are not manufactured in India. This isn't the first time they've moved some handset production to India due to the tax situation:

https://appleinsider.com/articles/20/06/18/apple-to-assemble...

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Apple is not just making for India, they have also started exporting. They have exported worth $1.4 billion, which may not be very large chunk for company as big as Apple, but Apple contractors are doubling down on India.

https://www.financialexpress.com/industry/apples-big-bite-ex...

iPhones are ridiculously expensive in India because of the import taxes - a decent chunk of the population would be able to afford them if they were brought in line with the US prices.

Right now iphone 13 price on amazon is ₹73,990. US price before sales tax $799 which is ₹60,646. Add 18% GST which is charged even in product manufactured in India, you would get ₹71,562. So basically around 3% is charged as import fees.

Apple has a store in India:

https://www.apple.com/in/iphone/

iPhone 13 is listed as ₹69900.00 (920$) vs. $799 in the USA. The former includes taxes, so its only fair to add $80 to the latter (taxes in my state are 10%), so it is still around $40 difference, which isn't bad.

But it appears that the iPhone 13s sold in India today are already being produced in India. If that is the case, any secondary resalers on Amazon are going to take a loss if they imported the phones the hard way (though they could have just smuggled them in).

> vs. $799 in the USA

vs. $829 in the USA

799 includes carrier discounts. You get bank discounts in India which would get the price down to little over $800

iPhone 13 costs about the same as it would if you bought it in the US.

But 13 Pro is a different story It costs $1580 compared to $1099 (incl. tax) in the US. I guess they don't make iPhone 13 Pros in India

A correction - the price of Rs.69,900 is for the iPhone 13 mini. The iPhone 13 is listed at Rs.79,900 in the Indian Apple store (~$1,050 against $799 in the USA).

Ah, thanks, I wasn't careful enough.

The base sales tax, which is GST in India, is also a lot higher (18%) than the average in the US (guessing it would be around 8%). A decent chunk of the population would be able to afford iPhones only if Apple reduces prices drastically and the GST rate goes to 12% or 5%. Neither of these are likely.

I think it's more to do with average household income. Per capita a US citizen earn 10x that of an Indian citizen.

Many articles point out that Apple has moved to expand production outside of China.

>Apple is reportedly increasing device production in countries outside of China as part of a diversification strategy. iPad production will begin in Vietnam as early as mid-2021, according to a Wednesday report from Japanese financial publication Nikkei Asia. Vietnam will also help produce the HomePod Mini.

Apple is also reportedly hoping to bolster smartphone production India and smart speaker production in Southeast Asia. Most of the computer production will remain in China, according to the report, but some Mac Mini production will be relocated to Malaysia. Some Macbook production is also set to move to Vietnam as well.

https://www.cnet.com/tech/tech-industry/apple-expanding-devi...

At the same time, they're also increasing their reliance on China[0] for piecemeal components. Specifically, their display, camera and storage has been pivoting to Chinese suppliers.

Assembly does seem to be moving out of China, but that was never the hard part (hell, assembly is even economically viable in the US). Their supply chain itself is a whole different story it would seem. From an economic and logistics perspective, Apple is now integrated deeper in China than ever before.

[0] https://asia.nikkei.com/Business/Technology/Apple-taps-more-...

Qualifying additional component suppliers is not quite the same thing as abandoning components made by companies like Sony and Samsung and pivoting to China.

>The Nikkei Asian Review says Apple is "aggressively testing" screens made by the Chinese company, as it considers taking on BOE as an OLED supplier to cut costs and reduce its reliance on Samsung, which is believed to be Apple's primary supplier of OLED displays.

Apple is seeking to diversify its supply chain as much as possible. The company often tries to secure at least two suppliers for any given component in order to reduce its supply chain risk and improve its bargaining position.

https://www.macrumors.com/2019/08/21/apple-aggressively-test...

That Chinese company, BOE, didn't manage to pass the necessary QC testing until late last year.

>The Beijing-based display maker began shipping a small number of organic light-emitting diode (OLED) displays for the 6.1-inch iPhone 13 in late September

https://www.macrumors.com/2021/10/13/oled-to-supply-oled-pan...

Yes. I wish they wouldn't. The potential danger of China having serious socio-governmental problems as a result of food shortages and policy collisions with Western powers is getting more significant every day. If Xi decides impending demographic collapse means taking Taiwan now is better than taking it later Apple and the rest of Western electronics giants could see their China access disappear overnight.

> Most of the computer production will remain in China

iMac are made in Thailand also (if not only)

I think there is also some legal limitations Apple wanted to overcome by manufacturing in India in order to operate their Apple Stores in India to directly sell to customers there without being forced to do merger with an Indian partner to sell their products.

China's supply chain is no longer price competitive. Apple and others have been looking at South East Asia for potential locations for years now.

The legislation that india created was just smart politics to ensure that these companies set up shop there.

It won't be competitive as lifestyle of China is growing. Its unfortunate that we can't have good stuff without exploitation (in today's context). I hope we can make leaps in manufacturing, so people from Asian country like India aren't exploited for shiny things like iPhone.

I believe same thing happened with Japan. As Japan grew rich, market in China started look attractive. And now, India is looking attractive. Looks like this vicious cycle will continue forever, as there will always be country with lax on human rights.

While I kind of dislike sounding like a neoliberal, one person's exploitation is another's lifestyle upgrade.

Hopefully in a decade or two electronic manufacturing will start moving to Africa and ultimately helps accelerate industrialization.

> Looks like this vicious cycle will continue forever, as there will always be country with lax on human rights.

If you are using Japan as an example, isn't there an eventual end to the exploitation once the country gets rich? In that case, the trade off should be worth it. The problem is if countries are exploited while not becoming becoming rich at the same time, like India during its colonial period. Not much good will come out of that.

The exploitation argument doesn't make sense. These economies have vast swarms of individuals doing nothing more than subsistence farming. Bringing manufacturing jobs to the region will do wonders for the local and the country’s economy.

Was India large part of their market?

Apple currently does not have much market share in India, but with a population of 1.38 billion people I'm sure they'd like to. They've been making iPhone SEs in India for a while now.

This report [1] says they ended calendar year 2020 with 2.4% market share and increased it to 4.4% in 2021.

[1] https://www.businesstoday.in/latest/corporate/story/exclusiv...

With over a billion people, you don’t even need a massive market share to have a massive market.

> They've been making iPhone SEs in India for a while now.

They've been making 11s,12s in the same plant in the OP

The 13 production started only now.

Nope, They have a single digit percentage market share in India. Whether that is shipment or actual usage. So in order to have a lower price / import tax they need to start manufacturing more components in India.

I think this will be an interesting development. Give the high $-to-INR rate, and prices of apple products, it will always be a hard sell. Indian consumers won't be eager to spend multiple paychecks on iPhones and don't see Apple dropping prices. Unstoppable force, meet immovable object.

I am not sure why they are making this move, what are their goals for doing so.

India has a huge middle class even if it is a small part of its total population. iPhones won't be popular with tuktuk drivers, but a techy, no problem.

iPhone SE’s are also only $400 now in the US. That should be closing in on the price of other Androids in India.

That’s mid range. Budget phones can be less than 10000 Rs ($130), which is still about 1/3 the median monthly salary.

Sounds like we have a solution for “encouraging” Apple and other manufacturers to start making things in the USA again…

Tarifs are not exactly a new or unknown concept to policymakers

Import substitution industrialization, as it's known, has been tried with pretty disastrous results in Latin America in the 1950s+, though South Korea and Taiwan pulled it off successfully, arguably. The idea itself is centuries old.

https://en.wikipedia.org/wiki/Import_substitution_industrial...

Think of the poor shareholders /s

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