India is poised to become the iPhone capital, replacing China.

Apple has ramped up iPhone production in India in fiscal year 2023, with the value of iPhones assembled in the country tripling to $7 billion, according to Bloomberg.

The American company has manufactured nearly 7% of its iPhones in India through expanding its partnership from Foxconn to Pegatron. This is a significant leap for the South Asian nation, as iPhone production there was estimated to account for only 1% of global iPhones in 2021.

Apple has been trying to expand its presence in the Indian market. Facing fierce competition from smartphone manufacturers such as Xiaomi (China) and Samsung (South Korea) in this market, Apple has launched new products and offered many attractive incentives, including price reductions.

Shift away from China

Apple 's move to increase production in India is part of a broader strategy to diversify its supply chain and reduce its reliance on China as tensions between Washington and Beijing continue to escalate.

“I think Apple will continue to rely on China for a significant portion of its production, but they are trying to diversify their supply base so that if something goes wrong in China, they will have several alternatives,” said Professor Willy Shih of Harvard Business School. Shih calls this strategy China +1.

In fact, Apple has recognized the importance of diversifying its supply chain for years, but the impact of the pandemic at the world's largest iPhone assembly plant in 2022 made it more urgent than ever. The disruption caused by Covid-19 is estimated to have cost the company one billion dollars a week.

The disruption caused by the Covid-19 pandemic at the Foxconn factory in Zhengzhou, Henan province, China in 2022 was one of the reasons Apple accelerated the diversification of its supply chain outside of the country. Photo: CNN

India is seen as Apple's primary hope for relocating its production lines outside of China. The country is expected to surpass China to become the world's most populous nation this year. Its abundant and inexpensive workforce, including many highly skilled engineers, is a major draw for manufacturers.

Furthermore, Asia's third-largest economy is also projected to be the world's fastest-growing major economy, despite lingering concerns about a global economic recession.

A 2022 report suggested that the country would produce approximately 25% of all iPhones by 2025, and that this figure could rise to 50% by 2027.

Apple may begin manufacturing its next iPhones in India at the same time as in China, starting in September of this year. If this happens, it would be the first time iPhone assembly begins simultaneously in two countries. This would also help Apple mitigate the supply chain issues the company faces in 2022.

Tim Cook's company will face numerous challenges in reducing its reliance on the technology supply chain built over decades in China. However, according to Bloomberg's analysis, they could reduce their dependence on the country by 20-40% by 2030.

Destination of the future

Apple's increased production in India is seen as a major economic victory for the South Asian nation, and also helps bring the country closer to its goal of becoming a leading global electronics manufacturing hub, replacing China.

Furthermore, the deepening relationship between India and major US technology companies like Apple will help India attract more global businesses to participate in its electronics manufacturing ecosystem.

It could be said that Apple has recognized India as a springboard for future growth, not only by increasing production but also by opening its first two retail stores in the country next week, one in Mumbai and one in New Delhi.

The importance of this market to the American giant is further confirmed when Apple CEO Tim Cook will personally fly to India to inaugurate these two stores.

Apple CEO Tim Cook is expected to travel to India to attend the launch of Apple stores in Mumbai and Delhi, and to meet with Indian Prime Minister Narendra Modi. (Photo: The Print)

Apple products in India are currently manufactured by three partners: Foxconn, Wistron, and Pegatron. Foxconn, Apple's largest contract manufacturer, plans to invest approximately $700 million in a factory in a southern Indian state to produce phone components, possibly including iPhones.

In recent years, the Indian government has launched numerous incentive policies to attract investment in the mobile phone manufacturing sector. These efforts have been successful. Samsung, the world's leading smartphone brand, has also ramped up phone production in the South Asian nation.

The South Korean electronics giant has recently been diversifying its production locations away from China due to rising labor costs there and fierce competition with Chinese domestic brands such as Huawei, Oppo, Vivo, and Xiaomi.

Samsung currently mass-produces phones in Vietnam and India, with India accounting for approximately 20% of the company's total global production.

In 2018, Samsung built a factory – dubbed the “world’s largest phone factory” – in Noida, near the capital New Delhi. Analysts believe the South Korean company paved the way for other manufacturers to relocate their production lines there .

Nguyen Tuyet (Based on Bloomberg, India Today, CNN)

Source: https://www.nguoiduatin.vn/an-do-sap-tro-thanh-kinh-do-iphone-thay-trung-quoc-a602941.html