By 2025, Apple Inc. may produce one out of every four iPhones in India, according to J.P Morgan analysts, as the tech giant shifts some of its manufacturing away from China due to rising geopolitical tensions and stringent COVID-19 lockdowns in that nation. Apple, based in Cupertino, California, has placed a significant wager on India since it started assembling iPhones there in 2017 with Wistron and later with Foxconn, keeping with the Indian government’s goal for domestic manufacturing. The pandemic impeded business supply chain relocation plans, but now that limitations have been relaxed, more firms, including Apple, are stepping up their efforts this year.
US and China rivalry is pushing technology giants to shift their production processes. More economic conditions are in such a way that each firm is looking for a better or cheaper source to make the production process most efficient.
Analyst J.P Morgans Comment on Apple Production in India
“Taiwanese vendors such as Hon Hai and Pegatron play a key role in the relocation to India. In the medium to long term, we also expect Apple to qualify local India, manufacturing suppliers,”
US technology giant Apple is shifting its production process to India and Vietnam, and experts forecast that by 2025 India will produce about 25% of Apple production and 20% of iPads. Similarly, Vietnam is expected to have a good share of production as 65% of Airpods will be manufactured in Vietnam by 2025. Vietnam will also be producing about 20% of iPads.
China is the largest cell phone maker market in the world, and Apple manufactures almost all of its phones and other accessories in China. Now in 2022, it’s the first time that Apple is looking for other markets for manufacturing. Previously Apple was producing only 5% outside China, but now it has been targeting up to 20%-25% outside China.
Choosing India is the foremost best option for China because it is 2nd largest mobile phone manufacturer in the world after China and almost accounts for 16% of world cell phone production. The other reason for shifting towards India and Vietnam is that these countries have relatively cheap labor compared to China. US and China tensions are a hurdle to a smooth production process for American firms in China.
China-US tensions can also be a reasonable cause for a shift from China to other countries. Though this reason is not much highlighted, it plays a significant role. Shifting manufacturing units to allies countries can smooth the manufacturing process even it will smooth the trade by minimizing the trade barriers or restrictions that also may lead to a decrease in the price.
According to a recent story by The Information, Google also intends to relocate some of the production of its Pixel devices to India. The business announced Wednesday that it would introduce the next Pixel 7 variants in India after forgoing delivering flagship models for two generations.
Samsung rivals Apple recognizes India as a significant international manufacturing hub and has established one of its largest facilities. The smartphone market leader, Xiaomi from China, and its rivals Oppo, Vivo, and OnePlus all assemble some of their products locally.
Even though Apple only holds a small portion of the Indian market, the iPhone manufacturer has increased its investment there over the previous five years. Two years ago, it launched the nation’s online Apple Store, and it has since made it known that it is finishing the opening of the country’s first physical Apple Store. It is highly expected that the Indian market will adopt the changes and be a comfortable host for Apple as a manufacturer. Even though India is a rising technology giant, it will be suitable for both.