Analysts claim that Apple made the decision to produce its newest iPhone in both China and India mostly in reaction to problems with the Chinese
Analysts claim that Apple made the decision to produce its newest iPhone in both China and India mostly in reaction to problems with the Chinese supply chain. Apple failed to satisfy demand for the 2022 holiday season after one of its key Chinese facilities shut down because of a Covid outbreak and accompanying protests, leaving customers with weeks-long wait times for their iPhones.
Increasing political tensions between the U.S. and China may possibly be a factor in the company’s decision to stop producing iPhones there, albeit they are not the main factor, according to a senior scholar at Brookings David Dollar. According to him, it is primarily economic and partially political.
Apple’s supply chain has faced difficulties because of the U.S. government’s assault on Chinese technology. For instance, restrictions imposed by the U.S. Department of Commerce in October 2022 forbade American businesses from supplying equipment to the Chinese chipmaker Yangtze Memory Technology Corporation, with which Apple was reportedly in talks to supply iPhone components, at the time. According to Nikkei Asia, the agreement collapsed after the restrictions.
Apple is hardly the only company that has moved its production away from China. Microsoft recently relocated some of its Xbox production to India, and Amazon AMZN -0.6% recently started producing Fire TV devices in Vietnam. Ben Bajarin, CEO of the analysis firm Creative Strategies, claims that Vietnam is among the countries that stand to gain the most if manufacturing moves away from China. Although Apple withholds information regarding its other manufacturing facilities, Bajarin told Forbes that the company has factories in Taiwan, Malaysia, and Vietnam that produce a small number of Macs but no iPhones.
Apple’s decision to begin producing iPhones in India may also be a result of the nation’s high import taxes on electronics, which make iPhones built in China more expensive in India than they are in the United States. For instance, the entry-level iPhone 14 retailed at $799 in the United States and $980 in India at launch, a difference of almost 23%. Foxconn, the maker of the iPhone, said earlier this year that it will invest $700 million to construct yet another factory in Bangalore, a thriving tech hub in the state of Karnataka in southern India.
In 2017, Apple started producing iPhones in India, originally just producing older or more affordable models. With the release of the iPhone 14, Foxconn began producing the new model in India for the first time. It will produce the iPhone 15 at a far higher rate and volume. According to Piyush Goyal, the Indian Commerce Minister, 5% to 7% of all iPhones are now produced in India, and the business wants to increase that to 25%.