The Next New iPhone Plant Could Be Good News For Foxconn, Apple And India

Apple Inc. AAPL iPhone manufacturer FOXCONN TECHNOLOGY FXCOF is reportedly in talks to build the company’s first iPhone plant in India. Maharashtra Industries Minister Subhash Desai recently told Reuters that "Foxconn is sending a delegation of their officers to scout for locations in a month’s time."

What Would An Indian Plant Mean For Foxconn?

Opening a plant in India could allow Foxconn to sidestep the recent rapid wage inflation in China, where it currently manufactures the majority of its devices.

Lower manufacturing costs in India could also help Foxconn maintain its precious manufacturing relationship with Apple, as the competition with rivals such as QUANTA COMPUTER INC QUCPF continues to intensify.

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...And For Apple?

Apple representatives in India did not respond to Reuters’ request for a comment, but Apple would seemingly be in favor of Indian manufacturing of its devices.

India currently represents the world’s third largest smartphone market, but the iPhone’s market share currently lags that of SAMSUNG ELECT LTD(F) SSNLF and other local competitors in India.

One of the biggest reasons for the iPhone’s underperformance in India is its hefty price. Apple’s 16 GB iPhone 6 sells in India for around $690, whereas Samsung’s 32 GB S6 currently sells for only about $625.

Any reduction in manufacturing costs provided by a local production plant could help Apple level the playing field against lower-cost rivals in India.

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...And For India?

Reuters suggests that a new Foxconn plant would be a “major victory” for India, which lost Foxconn’s manufacturing business in 2014 after client Nokia Corporation (ADR) NOK decided to drop Indian manufacturing.

Current Indian Prime Minister Narendra Modi has pledged to rekindle India’s manufacturing industry and transform the country’s tech boom into a production and employment boom.

India’s top competition when it comes to technology manufacturing continues to be China. The majority of India’s more than 100 phone companies currently get their products from China and Taiwan.