Apple's production shift to India: Not so fast, says DW

"It's not easy to build up manufacturing in India if you don't have component makers nearby." -- Counterpoint's Ivan Lam

From Nik Martin's "Can India relieve Apple's iPhone woes in China?" posted Wednesday by Deutsche Welle:

Apple's production shift to India — and to a lesser extent Vietnam — may be easier said than done due to the huge logistics networks that support the China facilities, Ivan Lam, senior analyst at the Hong Kong-based Counterpoint Research, told DW.

"These supply chains are not only built on manufacturers but also component suppliers. It's not easy to build up manufacturing in India if you don't have component makers nearby. Foxconn will still need to ship components to India, so it may not be worth it in terms of scale."

Lam said it would also take time for India to build up the same expertise in producing advanced models like the iPhone. Foxconn has a trained workforce in China in the millions rather than tens of thousands in India and has made huge investments in upgrading its China facilities, he added.

Despite the current headwinds, Bank of America Apple analyst Wamsi Mohan doesn't expect a "rapid decoupling" from China.

"Given Apple remains a major employer indirectly in China and has close ties across city, province and central government levels, we expect Apple to continue to navigate the US-China cross currents as they have done exceedingly well over the past several years," he told DW.

My take: The view from German public media.

3 Comments

  1. Jerry Doyle said:
    “…. My take: The view from German public media.”

    PED, would you be so kind as to expound on that view?

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    November 10, 2022
    • Bart Yee said:
      Jerry, from Wikipedia:

      “Deutsche Welle, “German Wave” in English, abbreviated to DW, is a German public, state-owned[1] international broadcaster funded by the German federal tax budget.[3] The service is available in 32 languages. DW’s satellite television service consists of channels in English, German, Spanish, and Arabic.[4] The work of DW is regulated by the Deutsche Welle Act,[note 1][5] meaning that content is intended to be independent of government influence. DW is a member of the European Broadcasting Union (EBU).[6]

      DW offers regularly updated articles on its news website and runs its own center for international media development, DW Akademie. The broadcaster’s stated goals are to produce reliable news coverage, provide access to the German language, and promote understanding between peoples.[7] It is also a provider of live streaming world news which can be viewed via its website, YouTube, and various mobile devices and digital media players.”

      I thought the review and perspectives they gleaned from sources we regularly check here at PED3.0 merited Phil’s attention and ours. Considering it may be more Euro-centric, it’s good to see how Apple is viewed from elsewhere.

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      November 11, 2022
  2. Gregg Thurman said:
    A shift of production from China to India will never be total, and will not occur overnight.

    But that isn’t the point. The point is that current production in China is getting more expensive and more problematic. Production expansion has the same problems plus available workforce is dwindling.

    India is hungry for the infrastructure investment, tax revenue and jobs for its under utilized workforce. It will be years (decades?) before India is economically on par with China (today).

    If all that Indian production capacity achieves is becoming a dependable alternative to Chinese production it will benefit Apple greatly. As a shock absorber for demand surges it will prove additionally beneficial to Apple.

    Further, Apple is not planning to cease introducing new products, or flat lining production of current products. As India’s workforce becomes increasingly proficient Chinese production will transfer to India, enabling Apple’s new, more advanced products to be produced by China’s more experienced work force.

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    November 11, 2022

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