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TLDR: Apple is shifting iPhone production from China to India due to geopolitical tensions, cost pressures, and incentives from the Indian government. India’s skilled workforce and political stability make it an attractive manufacturing base for Apple, while the company’s sales in China are declining.
China’s long-held position as the main maker of Apple’s iPhone may be ending. India is becoming a new base for production, a report says.
India’s Growing Share
Apple now makes up to 14% of its top phones in India, people in the know said. In the 2023-24 fiscal year, Apple put together $14 billion worth of iPhones there, twice as much as the year before.
Expert Anirudh Suri thinks Apple will keep moving its supply chain out of China. He says it’s a must for companies like Apple to diversify away from China due to politics. If they don’t, their shareholders would not be happy if they get caught in more US-China fights.
US-China Tensions
Former President Trump started a trade war with China, which put pressure on Apple’s manufacturing in the country. President Biden has added more tech limits on Chinese companies, deepening the competition with Beijing.
The US has said it doesn’t want to fully cut tech supply chains from China. But it has tried to reduce reliance in areas like computer chips, AI, and telecoms. Driven by national security worries, the US has put export limits and investment rules in place. China is speeding up its own tech progress.
Cost Pressures
Geopolitics isn’t the only reason for Apple to look elsewhere. It works with companies like Taiwan’s Foxconn to make its products. For 20 years, Apple has partnered with Foxconn in China. But the cost of these products has gone up in recent years. So profit is another pressure, besides politics, pushing Apple to find new places to make its goods.
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India’s Incentives
The Indian government has been quick to take advantage of the chance. New Delhi is offering attractive programs to bring in companies like Apple. This includes a $26 billion scheme for companies in 14 sectors.
Apple’s investments in India are starting to pay off as exports of its products from the country are going up. “Apple’s iPhone exports from India nearly doubled to $12.1 billion in 2023-24 from $6.27 billion in the previous fiscal,” Indian news agency PTI reported, citing data from The Trade Vision.
Skilled Workforce and Stability
“India is making a big effort to expand its manufacturing base, and companies like Apple want to have a presence there,” Suri added. States like Tamil Nadu have actively courted Apple. Political stability and a skilled workforce add to the draw. Apple also doesn’t want to rely too heavily on any one country, like Vietnam. So adding a base like India makes sense.
China’s Declining Sales
China makes up 20% of Apple’s global sales, making it one of the biggest buyers of Apple products. However, Apple sales in China are going down as local buyers shift to domestic mobile brands. Apple reported a 13% year-on-year drop in its China sales for the December quarter. Revenue in the Greater China region fell to $20.8 billion.
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