Apple to move manufacturing out of China to India, Vietnam

This comes after a series of unrest has caused the production of the iPhone 14 and the iPhone 14 Pro Max to take a hit. And this transition will focus its production capabilities on two nations -India and Vietnam. 

India is already home to three manufacturing partners, Foxconn, Wistron and Pegatron. In Vietnam, it has two partners - Luxshare and Inventec which are responsible for the AirPods and HomePods line of products. 

Last month, Ming-Chi Kuo suggested that India could see 40 to 45 percent of iPhone production. As of now, the figure is less, say around five percent. However, reports last week hinted that Tata Group is also working to tie up with Wistron.

As of today, around 80 percent of iPhones that are made in India are being used for the domestic market. According to Kuo, Tata’s partnership with existing Apple players can help boost the proportion of non-China iPhone production. 

However, the report highlighted that manufacturing in India is far from the haven many presume. It highlighted that every state has a different government and companies are burdened with too many obligations before they even begin building products. According to a former Foxconn executive, “India is the Wild West in terms of consistent rules and getting stuff in and out.”

This however will still take time, since China has been such an integral part of Apple’s functioning. The whole move out could take at least three to five years. 

Kate Whitehead, a former Apple operations manager who currently manages her own supply-chain consulting firm explained in the report that getting all the pieces to manufacture at the scale Apple needs isn’t an easy task. 

Apple has been dependent on China for a variety of reasons -- political stability, a large workforce, while the nation continues to be a large market for Apple’s products. 

What’s made matters worse for Apple has been the ongoing COVID-19 lockdowns across the nation, Daniel Ives, an analyst at Wedbush Securities, told the Wall Street Journal that China’s Covid-19 policy “an absolute gut punch to Apple’s supply chain,” and that “this last month in China has been the straw that broke the camel’s back for Apple in China.”

Orders in China drop 40%

U.S. manufacturing orders in China are down 40% as the country continues to grapple with COVID-19 lockdowns, according to the CNBC Supply Chain Heat Map.

Some U.S. companies have signaled plans to shift away from China. Apple is planning to pivot some production elsewhere in Asia, such as India and Vietnam, the Wall Street Journal reported on Saturday.

China has stuck by its zero-COVID policy amid a rise in COVID-19 cases in recent weeks.

The latest round of lockdowns sparked protests throughout the country, with hundreds of workers demonstrating this week in Zhengzhou at the flagship factory of manufacturer Foxconn, which serves as Apple's main subcontractor in China.

Source: Wall Street Journal