Daybreak - iPhone 17 mass production in India is faced with a China-led disruption. Here's why it's a good thing

Episode Date: July 17, 2025

iPhone 17 components have started arriving at Foxconn’s plant in Tamil Nadu. It signals Apple’s quiet but serious shift toward next-gen production in India, potentially starting as early as August. But as India is stepping into a more central role in Apple’s global supply chain, Foxconn is being forced to pull hundreds of Chinese engineers out of India. These are people who helped set up and run these complex manufacturing lines. The move has raised eyebrows with many interpreting it as Beijing’s geopolitical pushback against Apple’s China-plus-one strategy.Here’s the twist: what if this squeeze isn’t a setback, but a necessary shock? Could China’s pressure may actually accelerate India’s path to manufacturing independence?Tune in.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

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Did you hear the big news? Components for the next iPhone 17 have already started arriving in Foxcon's facility in Tamil Nad. Now, this is a huge deal, because it means that Apple is not just assembling older models in India. It is prepping for next-gen production right here, possibly starting as early as August. Apple has not made anything official yet, but this clearly signals that India is becoming a more integral part of Apple's global supply chain. Now, at nearly

the same time, Foxcon, the Taiwanese manufacturer, is being forced to pull out hundreds of Chinese engineers from its operations in India. These engineers were not just employees. They were the backbone of critical line setups, calibration and skill transfer. The timing of all of this has obviously raised eyebrows. Many are seeing it as a geopolitical squeeze from Beijing, punishing Apple's China plus one strategy, and also undercutting India's growing tech ambitions. But here's the thing.

What if I told you that these pressure tactics by China may actually be a good thing for India? Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nick Dha Sharma, and I don't chase the news cycle. Instead, every day of the week, my colleague Rahal Philipos and I will come to you with one business story that is worth understanding and worth your time. Today is Friday, the 18th of July. At first glance, the recall of Chinese engineers from Foxcon's India operations seem like sabotage. And to a certain degree, it is. These technicians were critical to building and stabilizing high precision manufacturing lines,

particularly those used in assembling complex products like iPhones. But the move did not really blindside everyone. Indian officials and Apple are both treating the situation more as a transition than a derailment. The Ministry of Electronics and IT has said publicly that engineers' withdrawal is a natural progression, one that forces India to lean more heavily on its own growing talent wound. Apple, meanwhile, is quietly pivoting to Vietnamese and Taiwanese personnel while ramping up local engineering capacity. But why is all of this important?

Because even as India scaled up its production numbers in the recent years, much of the technical expertise still comes from abroad, especially China. The system relies on Chinese engineers to fine-tune processes, solve machine-level issues, and train Indian workers. and that dependency has now been exposed. But the arrival of iPhone 17 components is clear proof that production plans are not just slowing down. If anything, they are probably maturing. Just to give you a sense of how fast this shift is happening,

analysts at counterpoint research say that India was already producing 18% of the world's iPhone as of early this year. That is just two years after Fox School. began assembling them locally. And get this, by the end of this year, once Foxcon's new Davenhally plant near Bangalore is fully up and running, India could be assembling up to 30% of all iPhones globally. Meanwhile, Foxcon's operations in Tamil Nad remain active.

But there is a catch. Stay tuned to find out. You see, China's move fits a pattern. A tightening grip over strategic exports, including critical raw materials and. high-end manufacturing tools. It is basically a message to global companies saying, leave China and it will cost you. Meanwhile, India's factories still import most of the high-value components that go into an iPhone. You know, things like chips and camera modules. Critics like to

call what is happening in India screw driver work. Basically, just final assembly with not much real value being created locally. But now that is changing. The government is used. The government is using targeted subsidies to encourage companies like Apple to localize more of their supply chain. And it is working. Indian companies are already supplying casings, specialty glass, even some of the advanced coatings. Plus, there is a mandate by the government. By 2028, 30% of an Apple product's value must be sourced from India.

And because of China's latest tactics, Delhi is pushing harder on ecosystem localization from materials and machinery to the engineering talent that is required to run all of it. Now, this is not just about building forms, it is about owning the infrastructure behind them. And China's move is the much-needed push that India needed. We are already seeing realignment in three ways. First is upskilling. Foxconn, Apple and the Indian government are already investing in localized training programs to deepen the local talent pool.

And the goal is engineers who can run, fix and optimize these lines without external help. The second is helping diversify partnerships. With China less reliable as a supply source, Indian companies are turning to South Korea, Taiwan and Japan for equipment and collaboration, especially in tooling and chip packaging. And the third is deepening domestic capacity. Companies like Dixon Technologies are no longer just contract assemblers. they are building full-stack capabilities in design, integration and sub-component sourcing. So you see how this is actually a strategic opportunity.

And if India can answer it through capability building, better policy support and sustained global partnerships, it won't just be an alternative to China. It can become a force in its own right. But as of now, a lot of this depends on subsidies from the government. Take Dixon Technologies, for example. The 30-year-old contract electronics manufacturer made a name for itself by producing smartphones for global giants like Xiaomi, Google, and kind of became the poster boy for make-in India. Think of it as India's own answer to Foxconn.

And then, thanks in large part to its participation in the government's 35,000 crore-ru-p production linked incentive program or PLI scheme for smartphone manufacturing, Dixon's revenue soared about 500% to nearly 18,000 crore rupees in the five years to financial year 2024. But as my colleague, the Ken reporter Shrhti Yacher wrote about in February this year, now this bet is not looking that great. For starters, Dixon remains largely dependent on domestic sales. But the bigger concern of all of this is the company's heavy dependence on the government's incentive, which, according to industry analysts, may soon come to an end.

So, Dixon is not in trouble yet, but investors are beginning to wonder if this is a company with sustainable business model or if it is just a PLI-fueled growth story waiting for the next government policy shift. Because you see, the real game is global and Dixon, or companies like it, have to prove that they can play before the subsidies run out and the world moves on. So, what we are seeing right now in India is more than just a manufacturing readjustment. It is a test of resilience and intent. Yes, the departure of skilled Chinese engineers has created short-term pressure, but it also removed this long-term crutch.

The gap that they leave behind is real, but so is the opportunity to fill it with something more durable. And so far, as iPhone 17 parts land on Indian soil, Apple's accent. speak louder than Beijing's pressure tactics. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories,

newsletters and podcast extras. To subscribe, head to the Ken.com and click on the red subscribe button on top of the Ken website. Today's episode was hosted by Snika Sharma and edited by Rajiv Siyah.