Apple's expansion into India has just encountered a setback. Foxconn, the assembly giant that Apple relies on, has withdrawn about 300 Chinese engineers from a factory in southern Tamil Nadu.

That factory belongs to Yuzhan Technology, one of the manufacturing "arms" of Foxconn. This is not a random withdrawal of engineers. This is the second time in just a few months.

Foxconn did not give a reason. Apple remains silent. But those familiar with the situation say Taiwanese engineers are being brought in quickly to replace the departing Chinese workers.

Those workers are not cleaning staff. They are handling high-precision parts such as metal casings and display modules for older iPhones. This incident has thrown Apple's localization plans into chaos.

The Yuzhan factory has just started operations and has not yet produced parts for the new iPhone. That is the product line that Apple has high hopes for. But instead of ramping up production, they are losing skilled workers.

Bloomberg reported last month that Foxconn had withdrawn Chinese engineers from iPhone assembly lines in India. This withdrawal only adds weight to what is clearly becoming a trend.

Sources indicate that the withdrawal of engineers is related to China's quiet resistance to the loss of manufacturing power. Earlier this year, Beijing officials communicated through regulators to stop the export of technology and equipment to India and Southeast Asia. There were no official announcements. No public statements. Just a silent order to prevent companies like Foxconn from moving their supply chains out of China.

It has not been confirmed whether Beijing forced the withdrawal. But the timing is clear enough. Foxconn's actions show that the power of Chinese technicians still holds much sway in the iPhone supply chain. As soon as they leave, production is disrupted.

Foxconn and Apple did not respond to inquiries from reporters. Meanwhile, The Economic Times reported that Chinese employees of Yuzhan have started to leave, which now seems completely true.

Currently, Apple is importing more display modules and using local Indian suppliers for metal casings. But the gap in experience and training still exists. Apple’s partner in India, especially Tata Group, the only domestic iPhone assembler, is rapidly growing. But they are still experiencing a steep learning curve. Chinese factories have had twenty years to perfect iPhone assembly. India has only just started for five years.

Apple has made a deliberate decision to exclude Chinese suppliers from its expansion plans in India. But that choice is being tested right now. Without those engineers, speed and quality may be affected.

On the larger geopolitical front, India and China are continuing to negotiate. Beijing has offered to supply precious metals and mining equipment, but so far there has been no follow-up action. If India-China relations stabilize, it could make Apple’s life easier. But don’t place too many hopes on that.

Apple's plan to focus on India has just become more complicated. If you are reading this, you are already ahead. Keep up with our newsletter.

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