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A fire engulfed the Hosur, Tamil Nadu-based Tata iPhone component manufacturing plant. This has led to the shutdown of the plant and in turn the production till further notice.
The above-mentioned halt in production could serve as a blow to Apple as the Indian festive season approaches and the demand for Apple products surges. Rumors are circulating that Apple may look into increasing its imports from China to fill up the supply gap.
The fire at the Tata plant has raised a concern about Apple's production capacity. Hong Kong-based Counterpoint Research predicted local sales of 1.5 million units of iPhone 14 and 15 models during the Indian festive season. Further noting that Apple might be able to reach only 85% of the projected demand.
Counterpoint which has for years tracked Apple's global shipments, its CEO Neil Shah commented, "There will be a 10-15% impact on production of older iPhone models from India. Apple could offset that impact by importing more components, and by re-routing more export inventory towards India,"
Tata is key to the supply chain for Apple beyond local sales. The Group has shipped iPhones and components valued at over US$250 million to the Netherlands and the United States markets till August 31, 2024.
Inventory of back panels from the suppliers of Apple generally last for three to four weeks. However, according to Apple sources, they estimate that they are currently in a sufficiently comfortable position with a stock of eight weeks.
If the production issues continue unabated, Apple may have to establish even more assembly lines in China or add shifts so that it can source adequate components for its Indian makers.
This is one of many challenges for Apple in India, raising concerns about the "Make in India" initiative.
Other previous product releases were halted when assembly plants caught fire and labor strikes took place at Wistron and Foxconn.
Tata is estimated to account for 20-25% of Apple's global shipments this year. Last year, the number was between 12-14%. The fire-affected unit comprised about 20,000 workers.
It is unclear if this incident would delay the opening of another unit scheduled to start producing complete iPhones later this year.
