SUMMARY
- Apple is negotiating with Micron and Tata Group to source $12 billion worth of semiconductors made in India by 2026.
- India aims to become a key player in the global semiconductor industry, supported by a Rs 76,000-crore government incentive scheme.
- Apple’s shift to India is part of its broader strategy to diversify its supply chain beyond China.
Apple has entered into negotiations with Micron, Tata Group, and other chip manufacturers establishing plants in India to source semiconductors worth $12 billion. This procurement will support the production of iPhones in India and is expected to reach the stated level by 2026, as per industry experts. At that time, Apple aims to shift 26% of its global iPhone manufacturing capacity to India.
Should Micron and Tata Group’s semiconductor units, expected to be operational by 2026, manufacture chips meeting Apple’s specifications, these firms could fulfill a significant portion of Apple’s requirements, presenting a substantial business opportunity. Currently, no single company in the defense, aviation, or auto sectors matches Apple’s projected spending on India-made microchips.
Apple produced iPhones valued at $14 billion in India in FY24, the highest production value by any single company in the country, representing approximately 14% of its global iPhone production. As of 2022, Apple’s semiconductor consumption globally has surged from $18.8 billion in 2011 to over $72 billion. This increase highlights the expanding role of semiconductors in Apple’s wide range of high-end consumer products, including iPhones, iPads, Macs, Apple Watches, and AirPods.
Historically, Apple relied on the Taiwanese Semiconductor Manufacturing Company (TSMC) for its semiconductor needs, with Apple alone accounting for over 26% of TSMC’s global sales. Until three years ago, Apple manufactured all its iPhones and most of its consumer products in China. However, geopolitical tensions and the strategic need for diversification have prompted Apple to reduce its dependency on China.
The Indian government launched a Rs 76,000-crore incentive scheme in 2022 to boost domestic semiconductor production. The initiative has approved five chip projects valued at Rs 1.5 lakh crore, including Micron’s Rs 22,516 crore ATMP project in Sanand and Tata Group-Powerchip Semiconductor’s Rs 91,000 crore semiconductor fabrication plant in Dholera.
The government provides fiscal support covering 50% of the project costs, aiming to attract more global players and develop a robust domestic semiconductor ecosystem. Given the high demand for semiconductors, which is projected to drive a $1-trillion global industry by 2030, the government is considering increasing the scheme’s financial outlay to meet the growing needs.
By 2026, Apple’s negotiations with Micron, Tata, and others could redefine India’s semiconductor landscape, making the country a significant player in the global semiconductor supply chain. The increased focus on domestic sourcing aligns with India’s aspirations to be a pivotal hub in the semiconductor industry.
