Apple

Apple to move 25% of iPhone production to India by 2025, 20% of iPad and Apple Watch production to Vietnam, analysts say • TechCrunch

Apple began assembling some of its devices in India and Vietnam a few years ago, slowly reducing its reliance on China. The Cupertino giant is now preparing to turn the two nations into key global manufacturing hubs, according to analysts at JP Morgan.

In a report sent to clients on Wednesday, JP Morgan analysts said Apple will move 5% of global iPhone 14 production to India by the end of 2022 and expand its manufacturing capacity in the country to produce 25% of all iPhones by 2025

Vietnam, on the other hand, will contribute 20% of all iPad and Apple Watch production, 5% of MacBook and 65% of AirPods by 2025, the report reviewed by TechCrunch said.

India has attracted investment from Foxconn and Wistron in recent years by offering lucrative subsidies as New Delhi seeks to turn the country into a manufacturing hub. The presence of foreign manufacturing giants coupled with “abundant labor resources and competitive labor costs” make India a desirable location, analysts said.

Apple rival Samsung has identified India as a key global manufacturing hub and has set up one of its largest factories in the country. Chinese smartphone maker Xiaomi, which is currently the market leader, as well as its rivals Oppo, Vivo and OnePlus also locally assemble a number of their phones in the country.

Google is also planning to move some of its Pixel smartphone manufacturing to India, The Information recently reported. The company, which missed shipping flagship models in India for two generations, said on Wednesday that it will launch the upcoming Pixel 7 models in India.

Although Apple has a small market share in India, the iPhone maker has expanded its investment in the country over the past five years. The company opened its online Apple Store in the country two years ago and has publicly shared that it is working to launch its first physical store in the country.

Foxconn currently has more than 20,000 operators in its iPhone assembly business in India, compared with 350,000 in China, analysts estimated.

“India’s iPhone supply chain has historically only supplied legacy models. Interestingly, Apple has asked EMS suppliers to manufacture iPhone 14/14 Plus models in India in 4Q22, within two to three months of starting production in mainland China. The much shorter interval suggests the growing importance of manufacturing in India and likely larger iPhone allocations for manufacturing in India going forward,” the report added.

“We believe that Apple is only manufacturing iPhone 14/14 Plus models in India now due to the more complex alignment of the iPhone Pro series camera module (made by EMS suppliers) and the higher demand in the local market for the iPhone 14 series ( tax savings). We expect volume to start small in 4Q22 (~1 million units per month, or 5% of total iPhone volume).”

In the “short term”, China and Taiwan will continue to gain market share due to better cost structures, the analysts said.

“Taiwanese EMS providers, especially Pegatron and Wistron, are more selective and prioritize profitability while focusing on new areas such as EVs and servers. Hon Hai remains the primary EMS partner for the iPhone and should benefit from the move to India,” the report said.

“Mainland China-based manufacturing share should go to local suppliers, while Taiwanese EMS have an advantage in India. In Vietnam, we expect the share to be split between Taiwan and mainland China EMS.”