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Apple to Shift 20% of Its Production to India

2020-05-19 14:24
The CCP virus has prompted the manufacturing industry to consider diversifying its supply chains. According to reports from the Indian newspaper The Economic Times, Apple is planning to shift nearly a fifth of its production from China to India. Experts say the scale of investment, around $40 billion over the next five years, could also make India the largest exporter of Apple products, the report said. Apple’s CEO Tim Cook said in an interview: “We are really doing that, so as a part of this trip, the maps facility will be several hundred million dollars. And so all of these things add up to a significant amount of economic activity.” Cook started investing in India four years ago. As the pandemic takes a toll on the global economy, supply chains are shifting away from China. Apple is accelerating its plans to open factories in India. According to The Economic Times, the Indian government in March approved the Production Linked Incentive Scheme (PLI) for large-scale electronics manufacturing. The goal of the PLI is to increase the production of electronic components, semiconductors, and mobile phone components, creating 200,000 new jobs over five years. Indian officials revealed that Apple is considering shifting 20 percent of its production capacity out of China, which sums up to around $40 billion in investment over the next five years, The Economic Times reported. Vice President of Taishin Securities Investment Advisory, Huang Wenqing said: “(The U.S. block on China’s) technology, as well as the tariff trade barrier, are issues that might heat up again in the future. Therefore, it is likely that China-based production bases, such as Honghai [Foxconn], will start to shift their production capacity outwards.” Although 90 percent of Apple’s products are currently assembled in China, its main supplier—Taiwanese manufacturer Foxconn—has long begun laying out strategies (to build factories) in India. Foxconn signed a pact with India in August 2015 to invest $5 billion over five years. In fact, Foxconn manufactured and assembled the iPhone XR in India last year. Wistron Corp has long begun producing affordable versions of the iPhone SE, as well as the subsequent iPhone 7 and iPhone 8 related products in South India since 2017. Some experts say that Apple has not only focused on the domestic market, but has also gone further to make India a major production and export hub. Industry Analyst of Taiwan Institute of Economic Research, Qiu Shifang said (during a phone interview): “In the past, Apple's main production capacity was highly concentrated in China, which made it difficult to shift its production elsewhere. The supply chain of Taiwanese manufacturers may also be required to match the needs of downstream original brand manufacturers (OBM). For component manufacturers, the apparent overall elongation in the supply chain will make them face a certain degree of challenge.” According to The Nikkei, Apple plans to transfer up to 30 percent of the production of its popular Airpods from China to Vietnam, amounting to about 3 to 4 million pairs. Apple's plan to shift its production capacity away from China in the medium to long term has clearly become an irreversible trend.