Apple may turn to China as fire halts production at Tamil Nadu iPhone plant: Report

The halt in operations may force Apple’s suppliers to source critical parts from China or other locations, according to the report.

The fire occurred over the weekend at Tata's Hosur plant, the sole Indian facility supplying iPhone back panels and other parts to both Foxconn’s Indian manufacturing operations and Tata’s own iPhone assembly.

Following the incident, production has been suspended indefinitely.

Reuters reported, citing Hong Kong-based Counterpoint Research, that Apple is expected to sell 1.5 million units of the iPhone 14 and 15 models during India’s festive season, which runs from late October to early November.

However, the fire may prevent Apple from meeting up to 15 percent of this demand.

Neil Shah, co-founder of Counterpoint Research, told Reuters that older iPhone models produced in India could see a 10-15 percent drop in production due to the fire, and Apple may mitigate the impact by importing more components or reallocating export inventory to the Indian market.

In addition to supplying the Indian market, Tata has exported iPhones and parts worth over $250 million to countries like the Netherlands, the United States, and China in the year leading up to August 31, as per customs data.

While Tata declined to comment, Counterpoint Research noted that Apple’s suppliers typically keep a three- to four-week stock of back panels.

However, an industry insider believes Apple may have up to eight weeks’ worth of stock, meaning the short-term impact may be minimal, and if the production halt continues, Apple could potentially set up a new assembly line or increase shifts in China to maintain the supply of parts for India, according to Reuters report.

This disruption comes amid Prime Minister Narendra Modi’s efforts to encourage foreign companies to "Make in India," especially in the electronics sector.

Apple has been diversifying its supply chain beyond China, but past incidents in India, such as fires at Foxlink and Pegatron facilities and labor unrest at Wistron and Foxconn, have posed challenges to this strategy.

Prabhu Ram, vice president at Cybermedia Research, described these issues as “temporary setbacks,” emphasizing the importance of improving safety and operational standards to bolster India’s role as a global electronics manufacturing hub, as reported by Reuters.

Tata is one of Apple's newest suppliers in India, which is expected to account for 20-25 percent of global iPhone shipments this year, up from 12-14 percent last year.

The fire-affected plant employed 20,000 workers, while another unit within the same complex was set to begin manufacturing complete iPhones later this year, though it is unclear if the fire will delay these plans, Reuters reported.

Tata also owns another iPhone plant near Bengaluru, acquired from Wistron last year, and is in the process of acquiring a Pegatron facility in Tamil Nadu, near Chennai, according to reports.