Defect Rate Soars: Apple Encounters Challenges in Scaling Up Production in India

As part of its diversification away from China, Apple has been gradually shifting its production to India. While the tech giant is following the same blueprint it used in China 20 years ago, it has encountered “stumbling blocks” in its efforts to increase production in India.

According to the Financial Times, only half of the components manufactured at a casing factory run by Tata in Hosur are good enough to be shipped to Foxconn. This suggests that Apple has a lot of work to do in India to achieve the same level of production efficiency and volume as in China.

The report explains that Apple is training local staff and assisting in setting up production by sending product designers and engineers from California and China to factories in India, following the same approach used in China. However, the high defect rate of components manufactured at Tata’s casing factory highlights the scale of the work needed to achieve the same level of efficiency as China.

A former Apple employee explained that China’s suppliers and government were committed to doing whatever it took to win iPhone orders, completing tasks in days rather than weeks. This sense of urgency is lacking in India.

Mark Zetter, President of Venture Outsource, added that Indian manufacturers lack the ambition to deliver high-quality products to retain clients. When he researched for the Indian think-tank Gateway House five years ago, he found that contract manufacturers would often claim they could fulfill any electronics client’s needs, but they would be slow to respond to customer concerns and lack flexibility to respond to changes.

This current situation may impact Apple’s plans to increase production volume in India. During the Q1 2023 earnings call, CEO Tim Cook called India an exciting market and a major focus for the company.

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