India and Vietnam are emerging as Apple Inc’s next manufacturing hubs as assembly partners seek to add resilience to a supply chain heavily centered on China and shaken by its geopolitical and health challenges.
Key electronics manufacturers are moving faster to diversify their capacity globally, taking advantage of local incentive policies, Counterpoint Research analysts Ivan Lam (林科宇) and Bai Shenghao (白晟昊) said.
The multiyear effort, which began before COVID-19 and the economically stifling lockdowns that roiled China, could see leading partner Hon Hai Precision Industry Co (鴻海精密) move as much as 30 percent of its capacity to those Asian nations and Brazil, the analysts said.
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They said that a direct replacement for China is not immediately in sight, but firms such as Hon Hai — known internationally as Foxconn Technology Group (富士康科技集團) — and fellow Taiwanese assembler Pegatron Corp (和碩) are putting the foundations in place to handle more of the final assembly and packaging of products outside China.
“Led by Foxconn and Pegatron, companies have already invested in factories, production lines, relatively advanced manufacturing processes, and personnel training in India,” they wrote.
India’s vast population and high birth rate make it an attractive market for end-products as well as a manufacturing base, while Vietnam has lower labor costs than in China. Vietnam has attracted 21 Apple suppliers to operate in the country, the report said.
However, it does lack the ability to produce the all-important iPhone handset.
Smartphones manufactured in India grew 16 percent in the second quarter of this year, reaching more than 44 million units, Counterpoint’s research found.
For its part, China has seen its workforce shrink since 2020, World Bank data showed.
A legion of skilled workers who received some education and training has been the backbone of China’s rise as the world’s factory.
Apple has done its part to reduce reliance on individual factories or skilled labor by making its iPhone product design more modular and transferable across facilities, Counterpoint said.
The company has focused on ease of maintenance and deployment of new product assembly.
Manufacturing difficulty was reduced significantly with the iPhone 14 and iPhone 14 Plus models, Lam and Bai said.
“Now it is possible for the plants in India to produce the iPhone 14 almost simultaneously with the plants in China,” the analysts wrote.
Apple began iPhone production in India much faster this year than with prior generations.
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