Apple increasingly moving its manufacturing to India
Apple will in the coming years continue to move a portion of its production away from China and lower its reliance on Chinese suppliers, as the company seeks to build more supply chain resilience following the issues that arose at the height of the Covid-19 pandemic.
India and Vietnam are currently the biggest winners in Apple’s shift away from China, according to Bain & Company analysis. India is expected to become a major iPhone manufacturer in the years to come. From 2021 to 2022 the percentage of iPhones produced in India increased from 2% to 5%, with the share expected to eventually reach 25%.
Vietnam, for its part, already manufactures about half of all AirPods and an increasing amount of iPads and Apple Watches.
In Apple’s slipstream, some of Apple’s key components suppliers and contractors, like Foxconn and Foxlink, are planning to move some of their capacity to India. Specifically, Foxconn reportedly moved some of the production of the iPhone 15 to India this year.
Apple CEO Tim Cook met with India’s Prime Minister Narendra Modi earlier this year at the White House, where Modi addressed senior US leaders and CEOS of American and Indian companies. The meeting was also attended by the leaders of Alphabet and Microsoft, who are also banking on a shift towards India.
The aim for Apple is to diversify its supply chain away from China as tensions ratchet up between the US and China. Other big American companies are looking to do the same. Though China has long attracted foreign companies with low labor costs, Chinese government support for manufacturing, and great infrastructure and technology, the growing instability caused by rocky relations between East and West is spooking stakeholders and leading companies to seek friendlier shores.
“Technology manufacturers that have their facilities concentrated in one region or that sell to markets on the opposite side of the world are boosting resilience and improving efficiency by diversifying their manufacturing footprint to new locations in Asia, Europe, and North America,” notes the Bain & Company report.
A major focal point for much of this tension between China and the West revolves around one type of component used in everything these days, from credit cards to heavy machinery, to even refrigerators and cars: semiconductors. The market for the components has absolutely exploded in recent years and a shortage beginning in 2020, which caused global havoc, has only somewhat subsided.
Further reading: Global chip and semiconductor industry heavily reliant on Asia.
A whirlwind of factors contributed to the shortage, including Covid-19 and the Russian war in Ukraine. Legislation from the US and the EU has been aimed at securing the semiconductor supply chain. Ongoing tension between China and Taiwan, a major supplier of semiconductors to the West, is also causing some worry as a potential flash point.
