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India investigating fire at Tata plant, production

suspended

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Apple ( AAPL ) may lean on China imports to address shortfalls,

analyst

and source say

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Tata incident latest disruption at India Apple suppliers

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India estimated to have 20-25% of total iPhone shipments

in 2024

By Munsif Vengattil

BENGALURU, Oct 1 (Reuters) - Extensive damage from a

fire at Tata Group's Apple ( AAPL ) iPhone component plant in

southern India could hamper production ahead of a festive season

sales surge, an industry watcher and a source said, forcing the

U.S. firm's suppliers to arrange critical parts from China or

elsewhere.

The weekend blaze has caused an indefinite production halt

at Tata's Hosur plant in Tamil Nadu, the only Indian supplier of

iPhone back panels and some other parts for both contract

manufacturer Foxconn in the country and its own iPhone assembly

at another plant.

Hong Kong-based Counterpoint Research told Reuters it

estimates local sales of 1.5 million units of iPhone 14 and 15

models during the Indian festive season which runs from late

October to early November, with Apple ( AAPL ) struggling to fulfil as

much as 15% of that demand due to the fire.

"There will be a 10-15% impact on production of older iPhone

models from India. Apple ( AAPL ) could offset that impact by importing

more components, and by re-routing more export inventory towards

India," said Neil Shah, a co-founder of Counterpoint, which has

for years tracked Apple's ( AAPL ) global shipments.

Apart from local sales, Tata, one of India's biggest

conglomerates, also exported iPhones to the Netherlands and

United States as well as some parts to China, worth more than

$250 million overall, in the year to Aug. 31, commercially

available customs data shows.

Tata declined to comment.

Apple ( AAPL ) suppliers typically carry a three- to four-week stock

of back panels, Counterpoint said. An industry source with

direct knowledge of the matter estimated, however, that Apple ( AAPL )

was likely to have stock for eight weeks, and therefore would

not see an immediate impact.

However, they added that if the production suspension

continues, the U.S. company could set up another assembly line

in China or add shifts there to secure parts for India's iPhone

manufacturers.

Supply chain disruptions more generally have cast a shadow

over Prime Minister Narendra Modi's drive to attract foreign

investors to "Make in India", especially in the electronics

sector.

Apple ( AAPL ) has been diversifying beyond China but last year

separate fire incidents in India caused suppliers Foxlink and

Pegatron ( PGTRF ) to briefly halt operations, with authorities finding

much of the fire safety equipment at Foxlink's facility was not

functional. Contractors Wistron ( WICOF ) and Foxconn have also been hit

by labour unrest in recent years.

"These are temporary setbacks," said Prabhu Ram, vice

president at Cybermedia Research. "Continued efforts to improve

safety and operational standards are crucial for strengthening

India's position as an emerging global electronics

manufacturing hub."

Tata is among Apple's ( AAPL ) newest suppliers in India, which

analysts estimate will contribute 20-25% of total global iPhone

shipments this year, up from 12-14% last year.

The fire-hit plant employed 20,000 workers. Another unit in

the same Tata complex was due to start making complete iPhones

later this year and it is unclear if the incident will cause

this to be delayed.

Tata has another iPhone plant near Bengaluru, which it

acquired from Wistron ( WICOF ) last year, and a second one in Tamil Nadu

near Chennai, which it is set to acquire from Pegatron ( PGTRF ).