It’s been a tough week for Apple in India, a country that, oddly enough, has continued to bring them great joy. They have been betting heavily on the country for years and it is already reaping the rewards, being the most valuable company in India. However, last weekend a terrible fire broke out in one of the top iPhone 16 factories that they had in the country.
It was in a factory of Tata Electronics, Apple’s partner for the assembly of several of its iPhones. If it is true that it turned off after a few hours and that the causes are still being studied, the consequences for Apple are already starting to be an open secret: return to the country they were “fleeing”. Yes, China.
A fire is never good, but it’s not so good now…
Firefighters try to put out the fire at the Tata Electronics factory in Tamal Nadu last weekend
Although China continues to lead the way in manufacturing Apple products, Apple has been trying to diversify its business for some time, adopting the old expression of not putting all your eggs in one basket. Especially while there are high tensions and trade wars between his home country, the United States, and the territory ruled by Xi Jinping.
India’s tax and tariff advantages were a good excuse, in addition to being in one of the most attractive markets to be in full development. Thus, since 2017, Apple has continued to open and expand its factories in India with the help of partners such as Foxconn or Tata Electronics, reaching a milestone for the first time with the iPhone 16, since it These are the first iPhones of a new generation. that they are not only made in India for local sale but also for export. In fact, experts say that 23% of these terminals are manufactured there, figures that rise to 25% if we talk about iPhone shipments in general, regardless of the model.
What happened last weekend was devastating in the broadest sense of the word. A fire broke out at the Tata Electronics factory used by Apple in the town of Hosul, located in the southern region of Tamal Nadu. The good news is that no personal casualties were recorded of any nature whatsoever, despite the fact that this factory employed some 20,000 workers.
On the other hand, yes immense material damage occurred. The factory had to stop production and according to sources close to the factory, little or no materials can be reused. Most of it was burned down and, although it is expected to be rebuilt and activity resume, this will not happen in the short term.
And while it’s true that such tragedies never happen well, the truth is that of all times of the year, this is the worst for Apple. The one we live in now is the quarter in which Apple generates the most revenue from iPhone sales. Two determining factors combine: the date of availability of the new models and the proximity of the Christmas period. And we already know that Santa and Their Eastern Majesties usually always have many iPhones in their bags.
Apple has no choice but to turn to China again
Given the circumstances, sources close to Apple and Tata Electronics say that Apple is already aware of the consequences and has drafted its roadmap to compensate for temporary closure of Tamul Nadu plant.
On the one hand, it is believed that the most affected are not the iPhone 16, but the models of previous generations which continue to sell very well both worldwide and in India, where through authorized distributors , they continue to market earlier models. even the iPhone 14, which is the “oldest” of those sold by Apple in its stores around the world. Experts predict a impact between 10% and 15% on production
It would not be definitive, but Apple does not seem to rule out opening new factories in China
To resolve this problem, Apple would try to reduce this impact by importing certain components that were until now produced in the Tata factory in Tamul Nadu. However, this may not be enough and they are already predicting that it will be necessary restructuring the organization across China.
Although at the moment they continue to analyze all fronts, sources close to Apple indicate that they will have to increase orders to the factories they already have in China and that at some point they do not exclude open a new assembly line there. Something unthinkable just a week ago knowing that Apple’s plan was to continue to diversify its manufacturing with India.
Some might think that if new factories were opened, it would be ideal to do so in India. However, this does not seem to make the most economic sense, considering what it costs Apple to open factories in this country. They are considered investments, but since this is a new temporary installation, this does not compensate.
However, they added that if the production suspension continues, the US company could set up another assembly line in China or make modifications there to secure parts for Indian iPhone makers.
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