After fire at Tata's Hosur plant, stockpiles steady iPhone production ship

The fire on Sunday at the Tata Electronics factory complex in Hosur, which is set to play a key role in Apple Inc’s plans for a major ramp-up in iPhone production, is not expected to impact iPhone assembly, especially with the peak domestic festival sales season approaching and the iPhone 16 series having become available in India from September 20.

According to sources, there is enough inventory of enclosures already at the iPhone assembly plants of Foxconn in Sriperumbudur, Tamil Nadu, Wistron (recently acquired by Tata) near Bengaluru, and Pegatron near Chennai. As a result, there is no risk of halting iPhone assembly.

Tata Electronics only supplies a portion of the total enclosures required by Apple vendors; the rest are still imported. Apple has a contingency plan in place to source more from established suppliers if necessary. Although Tata has been exporting enclosures to China, the volumes have been relatively small.

“The plants assembling the iPhones already have ample inventory of enclosures, so there’s no concern about any disruption to iPhone production, including the iPhone 16. We also import enclosures to cover our full requirements as a backup,” said a source familiar with the development.

Emails sent to Tata Electronics and Apple Inc seeking comment did not receive a response.

Sources also said that Tata Electronics and Apple executives are still investigating the cause of the fire and exploring all possible factors. Unlike assembly plants, which are generally very safe from fire risks, component facilities often store chemicals and plastics that could have contributed to the blaze.

The breakthrough for Apple Inc at the Hosur complex will be the completion of the 250-acre facility, which is under construction and set to become the fourth iPhone assembly unit in India. This facility is expected to be operational by November this year. Equipment and production lines are currently undergoing stress tests to prepare for the increased demand the plant will handle.

Tata Electronics is investing Rs 6,000 crore in this plant, which will make Tata the second-largest iPhone assembler in India, following Foxconn. The fire did not impact this facility.

The combined site is projected to employ over 50,000 workers at its peak, with the majority being women. The component plant already has over 20,000 employees, and when fully operational, it will become the second-largest factory in the country after Foxconn.

For Apple Inc, the new plant will be crucial for increasing production volumes, especially for the export market. In 2023-24, Apple managed to shift around 10 per cent of its free-on-board (FOB) value of iPhones from China to India — a target initially set for 2025-26 under the production-linked incentive scheme. According to Goldman Sachs, Apple now aims to shift 20-25 per cent of its FOB value from China to India by the same deadline.

Impact check 

Sufficient inventory: Foxconn, Wistron, and Pegatron already have enough enclosures, ensuring no disruption in iPhone assembly

Partial supplier: Tata supplies only part of the enclosures, with the rest imported, providing a backup option

Future plans not hit: The upcoming iPhone assembly plant in Hosur, crucial for future production, was not impacted