InvestorQ : Is it true that Apple is now planning to shift substantial portion of its manufacturing base to India from China?
Mitali Bhutta made post

Is it true that Apple is now planning to shift substantial portion of its manufacturing base to India from China?

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2 weeks ago
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In a sense, the Apple iPhone has been synonymous with China. In fact, China was the first port of call for Steve Jobs when he planned the smart phone that changed the world. China literally had everything Apple was looking for. It had cheap labour, skilled workforce, disciplined labour force, business friendly rules and the ability to manufacture and handle scale. While iPhone started off in China, the year 2019-20 COVID pandemic was a watershed year when Apple found the supply chain constraints too oppressive and anti-business.

India is nothing new to Apple and it had started manufacturing its products in India and Vietnam about 4 years back but. According to a note by JP Morgan, Apple was likely to move 5% of its iPhone-14 global production to India by end of 2022 and scale it up to 25% of all iPhone production by end of 2025. Of course, India has to compete with Taiwan and Vietnam, two very preferred manufacturing destinations for Apple in Asia. The friendly policies adopted by India and the lucrative PLI scheme have helped this decision shift.

Despite these good tidings, India is currently very small in tech size compared to China. Foxconn (the largest outsourcer for Apple) has 20,000 operators at its iPhone business in India and 350,000 employees in China. iPhone 14 is expected to be a turning point that will shift Apple production to India. Now Apple has asked EMS vendors in India to start production within 2-3 months of starting production in mainland China for iPhone 14 and above. This is a positive signal, but China and Taiwan have better cost structures.

The good news is that production in China will certainly move towards Indian producers, but it would largely be Taiwanese EMS production that will move to India. India has been looking at wooing Apple for a long time and it seems to be finally working.

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