Apple to begin making iPhones in Karnataka from April

Apple Inc will begin assembling iPhones in India by the end of April, a Karnataka minister said on Thursday, as it heightens its focus on the world's fastest-growing major smartphone market as growth slows elsewhere.

The US company has tapped Taiwan's Wistron Corp to put together its phones in the tech capital of Bengaluru, said Karnataka Information Technology Minister Priyank Kharge. Apple executives met with him in January and confirmed the timeline, he said in a press release.

The start of iPhone assembly in India comes after months of speculation on Apple's plan for the market, which is led by rival Samsung Electronics Co. It signals a renewed focus on the country, where it just scrapes into the top 10, as growth begins to slow in China and other more mature markets.

The Cupertino, California-based company is said to have put forward a long list of demands - including a 15-year tax holiday to import components and equipment and a relaxation of local sourcing norms - in negotiations with the central government. It is not clear if any of these demands have been met.

"Apple's iPhones will be made in Bengaluru and all devices will be targeted at the domestic market," said Kharge. Kharge said the state will help Apple if it decides to turn to other contract manufacturers in the region.

"We did not discuss any other incentives," he said.

Apple didn't immediately respond to requests for comment by Bloomberg and others.

Apple chief executive officer Tim Cook said in an earnings call this week that India is "the place to be".

The company shipped 2.5 million iPhones into the country in 2016. While that is its best year ever in terms of revenues and sales, it only ranked 10th among vendors in the December quarter according Counterpoint Research. Apple accounts for less than 2 per cent of shipments in India, where an estimated 750 million smartphones will be sold by 2020.

The Apple devices will be assembled through a plant on Bangalore's outskirts operated by Wistron, a Taiwanese contract manufacturer. India will be only the third country globally to assemble iPhones, an indication of how important the country has become for one of the world's most valued companies.

The release said state ministers and officials had met with several senior Apple executives including Cupertino-based Priya Balasubramaniam, VP - iPhone operations, Dheeraj Chugh, director - iPhone operations, and Ali Khanafer, senior manager - government affairs (India and Middle East).

Taiwanese company Wistron, an original equipment manufacturer (OEM) of Apple, will make the iPhones out of its facility in the city's industrial hub of Peenya.

In December, Apple had published job openings on its portal for several positions at its OEM in Bengaluru, including an iPhone operations program manager whose responsibility would involve leading the OEM operations team, managing component readiness, ensuring parts availability, quality and collaborating with cross-functional supply chain teams.

The government said discussions are on with Apple for collaborations in other areas too. It did not specify what these areas are, but the government is said to be pushing for manufacture of some phone components too, so as to create a manufacturing ecosystem in the city.

In May, Apple had announced a design and development accelerator in the city to grow the iOS developer community and also guide Indian developers to leverage Apple's programming language Swift and build apps for Apple TV and Apple Watch.

Apple uses a fairly complex supply chain. The parts for the iPhone, iPad, iPod and Mac are manufactured, mostly by third parties, across 28 countries. It has 766 suppliers, of which 346 are based in China, 126 in Japan, and 69 in the US. There is one in India, a unit of Flextronics in Sriperumbudur in Tamil Nadu.