Apple begins making the iPhone 14 in India, marking a big shift in its manufacturing strategy

Apple said Monday it is assembling its flagship iPhone 14 in India as the U.S. technology giant looks to shift some production away from China.

“The new iPhone 14 lineup introduces groundbreaking new technologies and important safety capabilities. We’re excited to be manufacturing iPhone 14 in India,” the company said in a statement.

Apple’s main iPhone assembler, Foxconn, is manufacturing the devices at its Sriperumbudur factory on the outskirts of Chennai. 

The Cupertino, California, giant has been manufacturing iPhones in India since 2017 but these were usually older models. This time with the iPhone 14, Apple is producing its latest model in India for the first time, close to the device’s launch. Apple introduced the iPhone 14 earlier this month.

Apple will sell India-produced phones locally but also export them to other markets globally. Customers in India will begin receiving the locally manufactured devices in the next few days.

JPMorgan analysts said in a note this month that Apple will move 5% of its global production for the iPhone 14 to India by late 2022. Apple could also make 25% of all iPhones by 2025 in India, JPMorgan said.

Apple’s focus on manufacturing in India highlights the tech giant’s desire to diversify production away from China and boost customers in India, which is currently a small market for the company.

Apple still relies heavily on China for the majority of iPhone production.

But Beijing has persisted with a strategy of lockdowns to control Covid resurgences even as most of the world looks to open their societies. The zero-Covid policy has disrupted production at factories across China where lockdowns take place and highlighted some potential weak spots in Apple’s supply chain.

India has looked to boost local manufacturing of electronics through incentives.

Meanwhile, Apple has been looking to increase sales in India, the world’s second-largest smartphone market. Apple had just a 3.8% market share in India last year, as lower cost competitors such as Samsung and China’s Xiaomi continue to dominate, according to Counterpoint Research.

However, Apple was the top-selling brand in the ultra-premium segment, which are phones over 45,000 Indian rupees ($552), in the second quarter of this year. That’s thanks to strong momentum of its previous generation iPhone 13 models.

The iPhone 14 starts at 79,900 rupees ($980).

“Apple has a strong momentum in India. India is among the 20+ countries in the world where the premiumization trend has just started,” Tarun Pathak, research director at Counterpoint Research, told CNBC.