The production of iPhones in India is just going to get larger and larger, with a new report saying that Apple has entered into preliminary talks to start packaging chips in the country.
Apple's work to manufacture the iPhone and other products in India has meant rapid change in the country. This has already included growing a workforce of 350,000 people in just five years, but you can almost always expect more.
The latest future growth move appears to be component-related. Apple is reportedly trying to bring chip assembly to the country for the first time.
Apple is said by the Economic Times to be in preliminary talks with Indian chip makers. The discussions, according to people familiar with the talks, would see Apple bring chip assembly and packaging work to India.
This has apparently involved exploratory conversations with CG Semi, owned by Murugappa Group, which is constructing a semiconductor assembly and test facility in Sanand, Gujarat.
The talks are very much in the "initial stages," one source said. It will also be the start of an "uphill climb" for CG Semi, as it would have to meet Apple's famously strict requirements to secure the contract.
CG Semi is not the only company that is seemingly in talks with Apple. The iPhone maker is thought to be in discussions with several companies for a variety of supply chain tasks, with few expected to actually join the chain itself.
As for what kind of chips will be packaged by CG Semi, it is unclear what they will ultimately be. While it is highly improbable for them to be A-series chips, as made by long-time partner TSMC, a safer bet by one source is display chips.
A natural expansion
Apple's talks with local suppliers aren't unexpected, since it is always trying to improve the supply chain wherever possible. As Apple's production and supply chain in China is already so well established, the discussions in India will make much more of an impact to the bottom line.
By bringing some chip assembly into India itself, Apple shortens the distance some components take. This saves on transportation and import costs, among other factors.
This also reduces Apple's reliance on China even more. Apple has steadily built up its infrastructure in India, diversifying the supply chain so that it is more easily able to withstand major events like tariff battles or pandemics.
Apple's talks with CG Semi are not the only chip-related change happening in India. In May, the country's government invested $433 million into a joint venture between HCL Group and Foxconn to build a new semiconductor plant.
The plant, in Uttar Pradesh, is expected to be operational by 2027, with plans to produce up to 20,000 wafers per month, in turn creating 36 million display driver chips. While Foxconn is a current Apple production partner, HCL Infosystems was previously an iPhone distributor before losing the contract in 2018 as part of a distribution reshuffle.
