Apple is Considering Moving Production Out Of China; Will India Benefit?

Apple Is Considering Moving Production Out Of China; Will India Benefit?

December 6, 2022: As it prepares to move production out of Covid-hit China, Apple has asked its suppliers to actively look to assemble its products elsewhere in Asia, particularly in India and Vietnam.

The Cupertino-based tech giant’s long-term goal is to ship 40 percent to 45 percent of iPhones from India.

Violent protests in China, including the world’s largest iPhone factory in Zhengzhou, are no secret. Apple iPhone maker Foxconn’s facility in the Chinese city, the largest such production unit globally, has been rocked by protests over arrears along with anger over strict Covid-19 restrictions, thus hampering the production of iPhones.

Manufacturing has slowed to the point that waits times for the iPhone 14 Pro at the end of November averaged 37 days — the longest since a new model was released, according to Counterpoint Research.

Recently, a Bloomberg report also claimed that the unrest in Zhengzhou will lead to a shortage of 6 million iPhone Pros this season.

Noting these issues, Cupertino-based tech giant Apple has advanced its plans to move some of its manufacturing out of China in the past few weeks, the Wall Street Journal said, citing people involved in the discussions.

As it prepares to exit Covid-hit China, Apple has asked its suppliers to actively look to assemble Apple products elsewhere in Asia, particularly in India and Vietnam.

It is also looking to reduce its reliance on Taiwanese assemblers, led by tech major Foxconn Technology Group.

According to Counterpoint Research, Apple’s iPhone maker in Zhengzhou, China alone makes up about 85 percent of the iPhone Pro lineup, however, the recent upheaval has seen Apple shift away from there to new alternatives.

Last month, many protesters threw objects and chanted “Stand up for your rights!” In a viral video expressing anger over wages and Covid-19 restrictions.

“In the past, people didn’t pay attention to the risks of concentration,” Alan Yeung, a former US executive at Foxconn, told the WSJ. “Free trade was the norm and things were very predictable.

Now we have entered a new world.” In the latest update, the iPhone maker has told its manufacturing partners that it wants them to start trying to do more of the work outside of China, people with knowledge of the matter told the publication.

Unless places like India and Vietnam can also make new product introductions (NPI), they will stop playing second fiddle, say supply-chain experts.

New Product Introduction or NPI is when Apple assigns teams to work with contractors to translate its product blueprints and prototypes into detailed production plans.

Additionally, Apple’s decision to move manufacturing out of China is part of its long-term goal of shipping 40 percent to 45 percent of iPhones from India.

It currently ships iPhones in single-digit percentages, according to TF International Securities analyst Ming-Chi Kuo, who follows the supply chain.

Meanwhile, after Foxconn started manufacturing the latest iPhone 14 in India in September, another Apple supplier started assembling the model in the country last month.

Pegatron Corp, the maker of the iPhone 14 in India, has become the second Apple supplier in India and under the Product-Linked Incentive (PLI) scheme for smartphones between FY23 and FY25, Rs. 1,132 crore is planned to be invested.

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