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Agency: India’s share of iPhone production to equal that of China in the next five years

According to DIGITIMES Research analyst Luke Lin, India and Vietnam will be the biggest beneficiaries of the shift of the smartphone supply chain away from China. He estimates that India will produce 45-50% of Apple’s iPhones by 2027, on par with China, which will produce 80-85% of iPhones in 2022.

Luke Lin said that although India’s assembly capacity accounts for 10-15% of the overall iPhone production capacity by the end of 2022, the actual production in India so far is less than 5%. This is because PEGATRON only started trial production after September, and the production line built by Wistron for Apple has not yet reached maximum utilization.

“However, given the uncertainty of China’s epidemic control, the supply chain migration to India will accelerate in the future because of the need to diversify risk,” Luke Lin said, adding that in the first half of 2022, Quanta Computers, which accounts for 60-65% of MacBook production, was affected by the epidemic blockade in eastern China; in the In the second half of the year, Zhengzhou also took epidemic control measures, which triggered iPhone shipments from Foxconn factories last November.

This has forced Apple’s suppliers to raise wages to entice workers back to work, which in turn has increased the overall cost of manufacturing in China. As a result, Apple has been expanding its capacity in India and Vietnam as it seeks to better manage its supply chain amid uncertainty about the China epidemic and geo-environmental risks.

Today, Apple has accelerated the shift of iPhone production to India, while moving iPad and MacBook production to Vietnam. Goor has been assembling AirPods for Apple in Vietnam since 2020. “Also, some Apple Watch may be assembled outside of China,” Luke Lin said.

In fact, Apple had asked Wistron to build a factory in India two years before the U.S.-China trade war broke out. “At the time, the main focus was on the large Indian market,” Luke Lin said, adding that Apple wanted to gradually increase its production in India as local policies encouraged local manufacturing. “They believed it would help local consumers identify with their brand and help expand their market share there.”

But India lacks a well-developed infrastructure, and most suppliers are still based in China. That means parts still need to be imported from China, as well as the cost of making smartphones in India remains high. Despite the incentives offered by the Indian government to increase capacity in the wake of the U.S.-China trade war, the new crown epidemic has disrupted international logistics and domestic production in India, slowing Apple’s progress in landing manufacturing in the 2020-2021 period.

“However, in 2022, Apple is accelerating its supply chain migration to India as it begins to reweigh the risks of putting all its eggs in one basket due to the epidemic seal in China,” Luke Lin said.

In addition, Samsung Electronics is shifting its cell phone production capacity from China to Vietnam starting in 2019, and has assembly plants in Indonesia and South Korea. Luke Lin noted that Samsung is also increasing its production in India to capture the local market.

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