With the iPhone 14, Apple is outsourcing manufacturing to India
Apple sought to revaluate its manufacturing structure and spread out its factories. The Cupertino, California, firm announced its intention to mitigate geopolitical risks to supply efficiency by building production sites outside China in a news release issued on Tuesday, August 23rd. The subsequent iPhone 14 and beyond are anticipated to be manufactured in India.
The “zero Covid” plan of Beijing
The global impact of the epidemic was felt by Apple and other multinational corporations. Apple’s manufacturing in China has been drastically hampered by the country’s strict restrictions. Electronic factory closures have impacted supplies. The cost to the American firm during the last quarter is projected to be between $4 billion and $8 billion and it has had some serious concern about the reliability of their current production operations, as well as other big tech firms.
The United States and China are both nuclear superpowers, and their growing tensions are nothing new. House Minority Leader Kevin McCarthy and Speaker of the House Nancy Pelosi’s trip to Taiwan reignited old wounds. As a result, Apple is planning preventative measures in the event of future difficulties to ensure that their production is operational in case of trading bans or other measures by either countries.
Production in India that has been going on for years
Contrary to popular belief, since 2007, Apple has manufactured iPhones in India. As of 2021, Counterpoint Research predicts that only 3.1% of the company’s products were manufactured in India, while the Chinese mainland was responsible for 90%. But up until recently, this manufacturing was mostly geared at the domestic market, and it did not include high-end models. This is about to change drastically.
Production delays are cut down
Apple also wants to speed up the process of making iPhones. Rather to the typical 6–9 months, Tim Cook’s company is aiming for a 2–month production time.
Furthermore, Apple’s Taiwanese supplier Foxconn already has a factory outside the city of Chennai in southern India. It’s important to note that Apple isn’t just looking to India for production as some manufacturing operations have already been moved to Brazil and Vietnam. This diversification is key to ensure that international tensions to not interfere with production schedules.
The recent questionable success of China’s “Silicon Valley” in Lingang, Shanghai, that previously attracted names such as Tesla, which broke ground in 2019, might suffer the same fate. According to Bloomberg, Lingang only managed to attract domestic businesses to its high-tech free trade area. It seems that India is starting to take big chunks of the electronics industry, a switch that some businesses like Apple deemed crucial in these uncertain times.