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Apple Moving Production out of China

Business

Apple Store | Image by Shutterstock

Apple is in talks with Indian officials to relocate some of its iPad manufacturing processes. The operations that would be moved are currently carried out in China.

While no plans have been announced, the move would be the latest step in Apple’s expansion into the South Asian nation and would help reduce the company’s reliance on Chinese manufacturing.

News of the discussion comes amid a recent outbreak of protests at the world’s largest iPhone production facility in Zhengzhou. If the move to India materializes, it will further diversify Apple’s supply chain, increasingly hampered by disruptions in China.

In early November, Apple warned that iPhone shipments were delayed due to renewed lockdowns in China. The news led analysts to reduce iPhone sales estimates for the all-important holiday season.

While India has been the production location of older model iPhones for several years, earlier in 2022 Apple began assembling the iPhone 14 — its newest model — in the country’s southern region.

India is not the only location Apple is reportedly considering to diversify its supply chain. The Wall Street Journal claims the company is actively looking at other Asian countries, like Vietnam.

In fact, Vietnam is already considered the company’s most critical production hub outside of China. Apple suppliers Luxshare Precision Industry and Foxconn — the latter of which was at the center of headlines following demonstrations at its main campus in China last month — have begun production testing in the north of the country.

While India could inherit iPad production, Vietnam may become home to MacBook and Apple Watch production. The potential Apple Watch relocation in particular is notable. Its build requires advanced production techniques, like those traditionally found in China, to fit all necessary components into such a small device.

Various challenges to the manufacturing of Apple products in India may arise, as reported by CNBC. For instance, a domestic lack of skilled talent and experience building highly complex devices could slow Apple’s plans.

Apple may also have to play the role of diplomat. Longstanding tensions between China and India remain. Just two years ago, a standoff erupted between the two nuclear-powered nations due to an ongoing dispute over a shared Himalayan border. The subsequent skirmish led to the death of at least 20 Indian troops and 4 Chinese ones.

At present, Gene Munster at Loop Ventures estimates that roughly 10% of iPhones are made in India, but that number will likely rise, albeit slowly, CNBC reports.

“I think in five years, 35% will be manufactured in India,” and “Apple will add iPhone production to other countries outside of India and China in the next five years. Perhaps Vietnam, Malaysia and the USA,” predicted Munster.

Harsh Kumar of investment bank Piper Jaffray is not as optimistic. Despite Apple manufacturing its flagship iPhone 14 in southern India, Kumar said that it represents a small percentage of total units. As a result, he said, Apple’s diversifying efforts have a long way to go.

“While Apple has made efforts to move production out of China, in our opinion, India still accounts for less than 5% of total iPhone 14 production and is likely to help only to a limited degree at this time.”

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Jonathan Swift
Jonathan Swift
1 month ago

It is about time that Apple stopped propping up Communist China.