Apple has indicated to some of its subcontractors that it intends to continue to develop its production sources outside of China. India and Vietnam already have factories in operation, but the weight of China, in terms of production and consumption capacities, remains decisive and difficult to compete with in the medium term analyzes the wall street journal.
This interest from Apple for South Asia is not new, it has already been mentioned many times, such as in 2020 or 2021 when the pandemic paralyzed working-class towns as well as logistics operations. Above all, it has already had effects with iPhone 13s now made in India, AirPods in Vietnam, Mac minis in Malaysia…
Apple wants to rely on Vietnam and India to depend less on the China factory 🆕
Apple continues to focus on Southeast Asia for its production
The recently decreed confinements in China make Apple more determined than ever to reduce its dependence on this country, people who take part in these discussions have indicated on a daily basis. It’s about ” to optimize Apple’s production chain, as Tim Cook said during the latest financial results, without going into geographical details.
India is a good candidate to complement Apple’s device in China, as the workforce is just as large and the costs are low. Sign of a maturity of skills, recently local factories have tackled the production of the latest generation of iPhone instead of being content with older models (the 11) or entry-level (the SE).
However, this country is the only one to be able to compare with China, and even then, only in part. The others are much smaller in size. They do not have such great human capacities nor such a developed consumer market. Because China can both provide a huge labor force and a domestic market of customers who gulp down Apple’s products. To the point of having made it for several years now the second market behind the United States.
This double advantage is absent from other countries, including India. But in talks with its contractors, Apple is talking about making India an export country for locally made products. According to estimates from the firm Counterpoint, India would have represented 3.1% of iPhone production volume in 2021 – with China having taken care of the rest – and projections envisage an increase to 6 or 7% this year. Since Indian customers cannot yet absorb this additional cost, export can take care of it.
Apple would also like its partners to develop chains outside of China that can support production preparations for brand new devices. Instead of Chinese factories being at the forefront and foreign factories only duplicating what has been tested and run in at the big neighbor.
However, this requires long and heavy investments – and complicated in a period like the one we are going through – but which Apple, by its weight, can impose on its partners if they intend to keep its orders.