Apple starts manufacturing flagship iPhone 11 model at Chennai plant

Tech giant Apple has begun producing its flagship iPhone 11 model at its Chennai plant, possibly paving the way for the company’s top-of-the-line devices becoming available in India at lower prices because this precludes the hefty Customs duties levied on them.

On Friday, Commerce and Industry Minister Piyush Goyal and Information Technology Minister Ravi Shankar Prasad lauded the move, hailing it as an affirmation of the government’s push towards an “Atmanirbhar Bharat”.

Sources said this could be the beginning of a new era for Apple, which is preparing to begin manufacturing its newly launched iPhone SE (2nd Generation) of handsets in India. 

The cheapest handset in Apple’s cart, with a launch price beginning at Rs 42,500, is expected to drive iPhone sales during the current quarter, before the next flagship is launched in late September.

Preparations are in full swing since the government announced the production-linked incentive scheme as Apple is now planning to shift 20 per cent smartphone production from China to India.

According to Counterpoint Research, Apple remains the leading brand during April-June 2020 in the ultra-premium segment (more than Rs 45,000, which is about $600), driven by iPhone 11 shipments, though it lost some share to OnePlus in Q2.

iPhone 11, the device that turned Apple’s fortunes in India, has got its due share of the credit. After faltering sales and market share for the most part of 2018 and early 2019, it was the iPhone 11 series that brought Apple back into the picture as higher sales helped it regain top spot in the luxury smartphone market (above Rs 50,000).

After struggling to grow its handset business in India during 2018, Apple ended 2019 on a high note. Following record sales in the September quarter, the maker of iPhone, iPad, and MacBook put up a robust showing during October-December 2019.

Steps taken since April last year began to pay off from July 2019. From new and competitively priced iPhones to slashing prices of its older models, it had adopted a multi-pronged strategy. The entry-level new iPhone model in 2019 — iPhone 11 — was priced at Rs 64,900, or 15.6 per cent less than the XR variant of 2018. The model was priced even lower than the iPhone X, launched at Rs 70,990 only two years ago.

The latest step regarding iPhone 11 will further aid its growth, analysts said. The step complements Apple’s strategy to grow its business in India since late 2019 as it will further help it cut prices of iPhone 11 models. Currently, importing finished handsets attract duties in excess of 20 per cent.

Before beginning the production of iPhone 11 locally, Apple was procuring iPhone XR from Foxconn’s Tamil Nadu plant, while Wistron was assembling iPhone 7 in Bengaluru.

According to Counterpoint Research’s estimates, in India Apple was one of the fastest-growing brands during the second half of 2019, driven by multiple price cuts on its iPhone XR model. Localising the production of new models like the XR helped it bring down prices.

“Additionally, 2019 saw the fastest rollout of Apple’s new iPhones (11 series) in India, with aggressive pricing and a good channel strategy. In fact, the new series, especially iPhone 11, was introduced at a lower price point than iPhone XR last year. This has helped gain share during the festive season and in its launch quarter in India,” Counterpoint noted.

In the luxury segment, Apple is estimated to have gained share by 2-3 percentage points to 52-53 per cent during the period, analyst firm TechArc said. Over the past three months, the Department for Promotion of Industry and Internal Trade has reached out to dozens of American companies with manufacturing units in China as the global geopolitical mood has turned against Beijing. While India has offered reduced compliance burdens for companies and a more predictable regulatory framework, it has refused to provide company-specific incentives to investing companies.