Half of all iPhones could be made in India by 2027; Chinese suppliers are already feeling the effects

A new report suggests that half of all iPhones could be manufactured in India by 2027, up 25% from previous estimates by 2025.

Local suppliers are already feeling the effects of Apple’s efforts to outsource production, a Chinese report says, with Vietnam also benefiting from the Cupertino company’s plan to reduce its reliance on China…

Background

We’ve been warning for years about the need and difficulty of reducing Apple’s reliance on China, but the pandemic has made the company’s risk of putting too many eggs in one basket even clearer. Recent COVID-19-related outages at the world’s largest iPhone assembly plant are estimated to be costing the company $1 billion a week.

India has now established itself as Apple’s second largest iPhone manufacturing hub. Apple was hoping to hit a milestone last year by simultaneously assembling the iPhone 14 in China and India. In the end, it was not so successful, but the production of the iPhone 14 in India began in September. Simultaneous production is expected for this year’s iPhone 15 series.

Last year’s report said a quarter of all iPhones could be manufactured in India by 2025, and today’s report says the transition won’t end there.

Half of the iPhones could be manufactured in India

Bloomberg research shows that currently only 2.27% of Apple’s supplier facilities are located in India, which ranks 8th after the US, China, Japan, Germany, UK, Taiwan, France and South Korea. But the pace of change is already significant.

The South China Morning Post (SCMP) provides analytical predictions.

Luke Lin, a research analyst at Taiwanese newspaper DigiTimes, predicted last week that India could produce one in two iPhones globally by 2027, currently less than 5%.

The forecast is more aggressive than JPMorgan’s earlier forecast that India would account for 25% of the world’s total iPhones by 2025, but is in line with India’s rapidly growing iPhone supply share.

iPhone shipments in India doubled from April to December 2022 compared to the same period in 2021. Vietnam’s share of Apple’s MacBook and AirPods production is also expected to increase as contractors, including the Chinese, rush to set up factories there.

Chinese suppliers are already feeling the effects

Apple often warns against reading too much into supply chain reports. They’re not always accurate, and Apple’s policy of having multiple suppliers whenever possible means that even an approved change in company orders can be overridden by a balance change in company orders, another one.

However, there are some signs of impact from Apple’s ongoing efforts to move manufacturing out of China.

Another example is Goertek, which has been making acoustic parts for Apple AirPods and other devices in eastern China’s Shandong province for two years. The Shenzhen-listed company cut its profit estimate for 2022 by 60%, citing a request from a “key overseas customer” to stop production of the smart acoustic device. Although the company did not disclose the name of the customer, analysts including Actu identified the device as Apple’s AirPods Pro.

One consultant said a potential challenge is maintaining quality standards across a more diverse supply chain. Apple has always worked closely with Chinese suppliers to achieve quality standards.

“The key question will be how quickly Indian suppliers … can comply with these standards,” said Alan Day, a UK-based supply chain consultant. “Apple has been working with or developing Chinese suppliers for years, and it’s not going to happen overnight. Removing this ‘drive of excellence’ catalyst from the market could lead to a change in standards across the supply chain.

Given that most of Apple’s manufacturing outside of China is done by the same Taiwanese or Chinese companies, this concern may be overstated.

Photo by Screen Post/Usplash


For more Apple news, watch the video below:

Leave a Reply

Your email address will not be published. Required fields are marked *