Tata's iPhone plant fire may force Apple to rely on China ahead of festive surge: Report

Extensive damage from a fire at Tata Group's iPhone component plant in southern India could disrupt production and impact Apple ’s ability to meet the expected surge in demand during India’s festive season, news agency Reuters reported, quoting industry sources. The fire occurred at Tata’s Hosur facility in Tamil Nadu, which produces critical components like back panels for iPhones, supplying both Foxconn and Tata's own assembly lines in India. Production has been indefinitely halted as a result.

Apple , which anticipated robust local sales of around 1.5 million iPhone 14 and 15 units during India’s festive season (late October to early November), could face challenges in meeting demand. According to Hong Kong-based Counterpoint Research, Apple could fall short by up to 15 per cent due to the disruption.

Neil Shah, co-founder of Counterpoint, said, "There will be a 10-15 per cent impact on production of older iPhone models from India. Apple could offset that by importing more components or re-routing export inventory towards India."

Tata, one of India’s largest conglomerates, had been ramping up its iPhone production capabilities, exporting both iPhones and components worth over $250 million to markets including the Netherlands, US, and China in the last year. The plant, employing 20,000 workers, was key to Apple ’s India operations. Another unit within the Tata complex was scheduled to begin assembling complete iPhones later this year, though it remains unclear if this fire will delay those plans.

While Tata declined to comment, Apple suppliers typically keep a stock of components for 3-4 weeks. However, according to the report, Apple might have stockpiled enough components for up to eight weeks, potentially softening the immediate impact. If the halt continues, Apple may need to ramp up production in China or shift assembly lines there to maintain supplies for Indian production.

This incident is the latest in a series of disruptions for Apple ’s Indian operations. Last year, fire incidents at Foxlink and Pegatron led to brief production halts. Labour unrest at Wistron and Foxconn has also posed challenges.

Despite these hurdles, analysts expect India to contribute 20-25 per cent of Apple ’s total global iPhone shipments this year, up from 12-14 per cent in 2023. Tata's growing role as a supplier for Apple highlights the increasing importance of India in Apple’s strategy to diversify its production base beyond China.

Continued efforts to enhance safety and operational standards will be vital as India positions itself as a global electronics manufacturing leader, said Prabhu Ram, vice president at Cybermedia Research. "These are temporary setbacks," he noted, stressing the importance of improving safety protocols.

As Tata works to resolve the situation, it is also in the process of acquiring Pegatron’s plant near Chennai, further consolidating its presence in Apple 's supply chain in India.

(With Reuters inputs.)