Heavy damage caused by a fire at the Tata Group’s Apple iPhone plant in southern India could disrupt production ahead of a surge in sales for the holiday season, an industry watcher and a source said, forcing the US firm’s suppliers to order key parts from China or elsewhere.
A fire over the weekend halted production at Tata’s Hosur factory in Tamil Nadu, India’s sole supplier of iPhone back panels and other parts to both contract manufacturer Foxconn in the country and its iPhone assembly plant at another plant.
Hong Kong-based Counterpoint Research told Reuters it estimates local sales of 1.5 million units of the iPhone 14 and 15 models during the Indian holiday season that runs from late October to early November, when Apple is struggling to achieve about 15% sales. of that necessary need. in the fire.
“There will be a 10-15% impact on the production of older iPhone models from India. “Apple can offset that impact by importing more parts, and redirecting some of its exports to India,” said Neil Shah, founder of Counterpoint, which has been tracking Apple’s global shipments for years.
Besides local sales, Tata, one of India’s largest companies, also exported iPhones to the Netherlands and the United States and parts to China, worth more than $250 million in total, in the year to Aug. 31, shows cultural data available for sale. .
Tata declined to comment.
Apple’s suppliers typically carry three to four weeks’ worth of back panels, Counterpoint said. An industry source with direct knowledge of the matter estimates, however, that Apple is likely to have the stock for eight weeks, so it will not see an immediate impact.
However, they added that if the production suspension continues, the US company may set up another assembly line in China or add shifts there to secure parts for Indian iPhone manufacturers.
Supply chain disruptions have often cast a shadow over Prime Minister Narendra Modi’s drive to attract foreign investment to “Make in India”, particularly in the electronics sector.
Apple has been diversifying outside of China but last year separate fires in India caused suppliers Foxlink and Pegatron to temporarily suspend operations, and authorities discovered that several fire safety devices at Foxlink’s facility were not working. Contractors Wistron and Foxconn have also been hit by labor unrest in recent years.
“These are temporary issues,” said Prabhu Ram, vice president at Cybermedia Research. “Continued efforts to improve safety and performance standards are critical to strengthening India’s position as a global electronics manufacturing hub.”
Tata is among Apple’s new suppliers in India, with analysts estimating that it will account for 20-25% of total global iPhone shipments this year, up from 12-14% last year.
The factory that was hit by the fire employs 20,000 workers. Another unit in the same area, the Tata complex, was supposed to start making complete iPhones later this year and it is not clear whether this incident will cause this to be delayed.
Tata has another iPhone plant near Bengaluru, which it acquired from Wistron last year, and a second one in Tamil Nadu near Chennai, which it is due to acquire from Pegatron.