
Apple for the first time makes a top-of-the-line iPhone model in India - tech-historian
https://m.economictimes.com/tech/hardware/the-i-in-iphone-11-now-stands-for-india-made/articleshow/77135725.cms
======
neosat
This is really big deal IMO, but perhaps for a reason not directly mentioned
in the article and for which you have to realize something about India.
Progress in India is usually quite slow (and far slower if you compare to
places like US or China). But once there is one shining example, then (partly
because of the competition, partly because of the numbers of people) the
momentum is strong and only gets larger.

This is potentially one of those events and has the potential to catalyze high
end devices manufacturing in India leading to other second order effects of
expertise in other hardware manufacturing. Looking forward to the innovation
and confidence this unlocks.

~~~
missedthecue
The adage in India is that if you want to set up shop in china they roll out
the red carpet. If you want to set up shop in India, they roll out the red
tape.

~~~
tyre
why do you think this is?

The Jio piece posted here a few days ago (stratechery, I think) made a point
of Indian national pride, control, and home-grown expertise playing a large
role.

Is that the case with new businesses generally?

~~~
unmole
> why do you think this is?

Because the fundamental nature of Indian politicians is socialist and statist.

~~~
dartharva
> Because the fundamental nature of Indian politicians is socialist and
> statist.

That seems to have changed significantly now, after all a right-wing party has
been in power since 2014. It seems to fit well with a lot of the private
sector, and it did open up many entrepreneurship schemes too.

------
jedberg
Apple isn't stupid. They know there is a good chance producing in China will
no longer be profitable, or maybe not even possible with a future
administration.

I predict a lot of production will move out of China because the USA will
shift to a protectionist model in the next few years.

Apple is hedging against the same prediction.

~~~
thephyber
> Production will be stepped up in phases and Apple may consider exporting the
> India-made iPhone 11, reducing its dependence on China, two senior industry
> executives said.

This is being done to satisfy India's government so Apple can sell phones in
India.

The diversification away from China seems like a nice seide-effect, but it's
not assured until the Chennai-region FoxConn factory is running at full speed.
Last I heard the Wisconsin FoxConn factory didn't ever make it that far. It's
TBD if FoxConn can manage Indian employees.

~~~
wobbly_bush
> This is being done to satisfy India's government so Apple can sell phones in
> India.

What do you mean? Apple has been selling phones in India for several years
now.

~~~
totalZero
Apple has been selling phones in India through third-party retailers, not
through Apple stores. They were recently permitted to open their own stores.
The regulations involved take domestic production into account.

[https://appleinsider.com/articles/20/02/26/apple-ceo-tim-
coo...](https://appleinsider.com/articles/20/02/26/apple-ceo-tim-cook-
confirms-first-apple-store-will-open-in-india-in-2021)

------
jerkstate
Tim Cook insisted for years that you just couldn't manufacture stuff outside
of China because of the high level of manufacturing skill. [1] Looks like that
wasn't really true and it just took a little effort to start up in a different
country, all it took was a small increase in the cost of doing business in
China.

[1] [https://www.inc.com/glenn-leibowitz/apple-ceo-tim-cook-
this-...](https://www.inc.com/glenn-leibowitz/apple-ceo-tim-cook-this-is-
number-1-reason-we-make-iphones-in-china-its-not-what-you-think.html)

~~~
chillacy
They're still being made by Foxconn, so all that manufacturing expertise is
still there. In the long run my guess is that this knowledge will start to
trickle to more local manufacturers.

This seems like a great deal for India: threaten a 22% duty, and then you
bring in jobs and know-how.

~~~
econcon
>This seems like a great deal for India: threaten a 22% duty, and then you
bring in jobs and know-how.

Lots of products have very high duties but you'll not find a single
manufacturers of those products within the country.

Those companies simply add import duty to their cost and increase the price of
good in local market. This makes products/tool expensive for local people and
they are not able to compete globally.

If an America can buy a CNC mill from china duty free and you charge duty
which makes $4000 mill cost $7000. Due to higher costs, your local craftman is
already rendered uncompetitive in global marketplace

Why not let them buy tools and machines duty free and let them learn skills
like CNC machining or metal turning?

------
dan-robertson
This isn’t really much of a shift in Apple policy. They seem to be doing this
to avoid import duties and take advantage of some other government incentive.
I think they also assemble iPhones in Brazil for similar reasons (?)

------
chvid
Are they actually selling the iPhone 11 in India? Last I read phone sales in
India had a massive drop.

~~~
chvid
[https://techcrunch.com/2020/07/17/india-smartphone-
shipments...](https://techcrunch.com/2020/07/17/india-smartphone-shipments-
slashed-in-half-in-q2-2020/)

Smartphone shipments in India fell 48% in the second quarter compared with the
same period a year ago, the most drastic drop one of the rare growing markets
has seen in a decade, research firm Canalys reported Friday evening.

About 17.3 million smartphone units shipped in Q2 2020, down from 33 million
in Q2 2019 and 33.5 million in Q1 2020.

...

Apple, which commands only 1% of the Indian smartphone market, was the least
impacted among the top 10 vendors as iPhone shipments fell just 20% year-on-
year to over 250,000 in Q2 2020.

~~~
dpacmittal
India was in one of the strictest lockdown for a period of 2 months starting
March 23rd.

------
f00zz
The new Motorola Razr is also being assembled in India. Is this a trend?

~~~
perryizgr8
Samsung has been assembling flagships in India for a couple years now.
Certainly not new. New for Apple definitely.

------
numpad0
“Designed by Apple in California. Assembled in India.”

~~~
mmastrac
"... Taxed in Ireland"

~~~
tonyedgecombe
Or even "... barely taxed in Ireland"

~~~
valuearb
Apple pays taxes in every country it does business in. The remaining profits
it keeps in Ireland because of the low tax rate, otherwise if returned to the
US it would be taxed again.

US international corporate taxation works like this if you repatriate profits
to dividend to shareholders: 1) First pay taxes on profits in each country the
profits were made.

2) Out of the remainder pay state corporate income tax in the US state you are
headquartered in.

3) out of remainder pay federal corporate income tax.

4) out of remainder shareholder pays state income tax.

5) out of remainder shareholder pays federal dividend tax.

Typically the shareholder is able to keep about 30-40% of their share of the
original profits after they go through the five layers of taxation.

~~~
ksec
Well yes, the problem is people seems to think it should be "revenue" taxed
and not profits "taxed". ( Dont ask why, but that is the general sentiment )

And you can see they are very vocal about it, If they are sold in X, they
should be taxed in X.

The problem with current Profits based system is that it allows Apple X to
paid Apple Ireland 99% of your profits as IPR, Brand / Logo usage ( Apple
France paying to Apple Ireland ). Effectively leaving only 1% of the profits
being taxed in X.

And there is no way to determine the proper value of those IPR. Apple spends
tens of billions every year on R&D and Marketing. So not paying for those IPR
would be wrong, but also paying no tax in countries is also wrong.

And no one so far has a reasonable solution to fix the current profit transfer
problem. And it is a much harder problem with Globalisation.

~~~
sharpneli
VAT is basically a revenue tax.

For each iPhone sold in Finland the government gets ~20%. Plenty of countries
have a similar system.

~~~
bald
VAT is taxing the difference between the procurement price and the sales price
(thus its name Value-Added Tax), not the revenue.

E.g., if Apple Finland procures the phone from Apple Inter Co., two separate
entities, for USD 499 and sells it for USD 500, the tax would be on the USD 1,
i.e., 20 cents, since Apple Finland would get the VAT paid to Apple Inter Co
offset by the Finnish tax authorities.

~~~
joefourier
While true in a sense, that's not the best way of looking at it.

VAT is charged on the sale price of every intermediary, however businesses can
claim back VAT on their purchases. In your example, Apple Inter Co. would sell
the iPhone to Apple Finland for $499 + $119.76 (VAT in Finland is 24%). Apple
Finland would pay $618.76, claim back $119.76, and sell the phone for $500 +
$120 to the consumer, charging the consumer $620 and giving $120 to the
government.

So yes, Apple Finland will have given effectively about 20 cents to the
government, but the total $120 of VAT will still be paid and calculated on the
end sale price, not the profit margin.

------
jonplackett
> The company hasn’t cut prices as it also sells iPhone 11 handsets made in
> China in India but industry executives said that could be an option later
> on. Local production saves Apple 22% import duty.

Maybe they'll just keep the change instead.

------
politician
They should use the Foxconn plant in Wisconsin.

~~~
ksec
The whole point of Setting up a plant in India was to avoid / lower the high
import tax.

~~~
nojito
It's also cheaper to build (per phone) than in China.

------
andrewstuart
Serious question, why not in the USA?

~~~
chillacy
To the question in general: watch American Factory on Netflix for a good
documentary on the efforts of spinning up a US based factory. Basically this
company found that American workers were more expensive, had higher safety
standards, and quality control was a struggle. In the end the company started
to invest in industrial robots for automation.

To this specific case: it's probably to avoid the 22% import duty that India
places on products not assembled locally. I suppose the US could pass a
similar law.

~~~
skwb
Really? The message I got from American Factory was that there are stark
cultural divides between Chinese and American manufacturing. It's been a while
since I saw it, but they made a point to emphasize some of the poor financial
decisions the Chinese bosses made during refurbishing (I think an overly
expensive stage was built).

~~~
chillacy
Yes, there's no one thing in that documentary but a collection of things which
you could chalk up to "differing cultures":

* The scene where the plant operators from China dump a bunch of waste improperly

* The scene where the plant owner is worried about unionization (though the film contrasts this with the presence of unions in their Chinese plant)

* The scene where the plant operators are complaining that the american workers output with higher defect rate and lower speed

* The scene where the operators are complaining about the strict safety regulations and the fact that Americans like to take time off on weekends

That the plant owner spent tens of thousands of dollars to redo the factory
layout is just one example, but it's not more than a few minutes of airtime
compared to the quality control and union stories. If these can be put under
the umbrella of "cultural differences" then I agree with your assessment.

------
d3nj4l
I think the title should include "India", since I don't know if everybody is
expected to know that Chennai is in India.

~~~
ponker
Would you say the same about much smaller cities like Paris or Berlin?

~~~
machello13
Of course not. Obviously, how well-known a city is to a certain population
doesn't depend on its size. There are a dozen cities in China more populous
than NYC, but I doubt you could name them all.

~~~
didgeoridoo
There are two: Shanghai and Beijing. I would have guessed more too, but
apparently not.

~~~
Barrin92
There's more than two. New York has about ~8 million pop. From the top of my
head I can at least tell you that Shenzhen, Guangzhou, and Chongqing have over
10 million residents but there's probably more.

I think you may have pulled up NYC's metro area population and compared it to
the urban population of Chinese cities. The metro population of large Chinese
cities is in the 20-40 million.

~~~
didgeoridoo
It's kind of a question of where you draw the boundaries. Chongqing counts
~30M because its administrative area is the size of Austria. The UN World
Urbanization Prospects project [0] tries to establish comparability between
nations, and came up with a top 10 of:

1\. Tokyo - 37M

2\. Delhi - 29M

3\. Shanghai - 26M

4\. São Paulo - 22M

5\. Mexico City - 22M

6\. Cairo - 20M

7\. Mumbai - 20M

8\. Beijing - 20M

9\. Dhaka - 20M

10\. Osaka - 19M

NYC is next at #11 with 19M.

However, if you count strictly by "city proper" (as defined by a very wide
range of administrative agglomerations), there are indeed THIRTEEN cities in
China larger than NYC. I'm not sure this is a hugely useful metric, however,
as economically-relevant city boundaries aren't truly represented by
administrative lines of control.

[0]:
[https://population.un.org/wup/Publications/Files/WUP2018-Hig...](https://population.un.org/wup/Publications/Files/WUP2018-Highlights.pdf)

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bdcravens
offtopic: this site breaks the back arrow (takes you to blank interstitial)

~~~
eitland
Hint: for all but the most egregious offenders a long click (or right click)
on the back button might bring up a list of the pages you visited before this.
You can then click an earlier one to get back to safe ground.

Most people around here probably know already but there's always one or two
that will have their life improved a lot I think.

~~~
btown
Out of morbid curiosity, how does one become an "egregious offender" and nuke
the entire back-button history? Are there ways other than (intentionally or
unintentionally) doing history.pushState in a loop?

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Apocryphon
Could shifting manufacturing to India also lead to fewer leaks?

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m0zg
Shouldn't it be "Foxconn started making iPhone 11 near Chennai"? Apple is not
"making" anything in this case.

~~~
jjcon
By that same reasoning you could also say ‘Foxconn is company and it doesn’t
make anything, Indian people are making the iPhone 11 near Chennai’

It isn’t technically wrong but usually the inventor/creator is credited
regardless of who they paid to assemble it.

~~~
codemac
It's like the RICO act or something.

The Indian people are doing this voluntarily at the direction of Foxconn who
is doing this voluntarily at the direction of Apple.

I'm sure we can go higher than just Apple as well.

------
la6471
That is like less than 1 pc of what is made in China. For all the make outside
China hype I wonder how much serious effort will be needed to even make a dent
in their current production.

