The decision to manufacture its new iPhone in India and China basically addresses chain-of-origin issues in China, analysts say. After one of its major Chinese factories closed due to a Covid outbreak and the protests that followed, Apple struggled to keep up. for the 2022 holiday season, amid a shortage of iPhones that led to weeks-long wait times for customers.
Apple responded to a request for comment.
Rising diplomatic tensions between the U. S. and China may also play a role in the company’s abandonment of making iPhones in that country, though that’s not a major role, according to David Dollar, a senior fellow at Brookings. “It’s usually economic and partly political,” he told Forbes.
U. S. government repression The U. S. government’s crackdown on the Chinese generation has disrupted Apple’s supply chain. For example, the U. S. Department of Commerce has not been able to do so. The U. S. government issued restrictions in October 2022 prohibiting U. S. corporations from selling machines to Chinese chipmaker Yangtze Memory Technology Corporation, with whom Apple has reportedly been in talks to source iPhone parts. After the restrictions, the deal collapsed, according to Nikkei Asia.
Vietnam is one of the main beneficiaries of China’s shift away from production, according to Ben Bajarin, chief executive of analyst organization Creative Strategies. While Apple reveals important points about other production sites, Bajarin told Forbes that it has factories in Taiwan, Malaysia and Vietnam. , which gets a smaller amount from Mac but not iPhone.
Apple’s decision to manufacture iPhones in India is also likely due to the country’s lists of electronics import values, which are so high that the value of Chinese-made iPhones sold in India is particularly higher than in the United States. The iPhone 14 model costs $799 in the US. It was up in the U. S. at launch and 79,900 rupees in India ($980), about 23% more.
The price cap on iPhones has prevented further expansion in India, where Apple has about 5 percent market share, according to experts consulted by Forbes. It also means a huge opportunity for the company, with Apple seeing India’s 1. 2 billion people as its main market. where “everyone will have a phone at some point,” Bajarin said. “[Apple] will want to continue to grow and invest with production partners to make enough devices to meet the demand they hope to have someday. “
Apple started making iPhones in India in 2017 and only made older or cheaper phones in the first place. The iPhone 14 marked the first time manufacturer Foxconn began building the new style in India when it launched globally. Increased speed and volume. In January 2023, India’s Commerce Minister Piyush Goyal said that between 5% and 7% of all iPhones are currently manufactured in India, and the company’s goal is to increase that figure to 25%.
iPhone maker Foxconn earlier this year announced a $700 million investment to build a new factory in Bangalore, a booming city for tech corporations in the southern Indian state of Karnataka. However, production in India will still be “a fairly small fraction” of what is made. in China, said Brookings’ Dollar.
Despite diversification, China will remain a major production hub for Apple due to the slowing pace of iPhone production. It is “highly unlikely” that Apple will replace its global production, Bajarin told Forbes.