India, Vietnam… Apple continues to diversify its production outside of China

Strict Covid policy, diplomatic tensions… The reasons for the disenchantment between Apple and China are multiple. In order to reduce its dependence on the Middle Kingdom, the suppliers of the Apple brand continue to diversify the geographical location of their factories. According to analyzes by Counterpoint Research, relayed by BloombergIndia and Vietnam could benefit from this situation.

India, a buoyant market

The accelerated diversification movement before the Covid period continues among Apple suppliers. Foxconn, the main iPhone maker, plans to shift up to 30% of its production to India, Vietnam and Brazil. A real change for the Taiwanese group which still depends largely on its factories in China.

The big winners of this general reorganization could be India and Vietnam. In September 2022, Hanoi had nearly 21 Apple suppliers. An economic success story limited by the population of the country, close to 100 million inhabitants. Indeed, manpower could be lacking in the years to come.

On the Indian side, the demography presents similar characteristics to China, with a higher birth rate. “Therefore, many local and international consumer electronics brands identify India as a strategic market”explain the experts at Counterpoint Research.

Securing production

For the release of the iPhone 14, Apple had already anticipated possible problems in China. Part of the production of the 14 and 14 Plus models has been delegated to India. An operation that has not failed to reduce the production difficulties of recent weeks. From now on, “industries in India can produce iPhone 14 almost simultaneously with factories in China”.

At the same time, the so-called production “location” Expected to continue in Indonesia and Brazil. Mexico could also do well due to its geographical proximity to the United States. In the next few years, the country could welcome the manufacture of classic electronic devices, but also a significant range of electric vehicles. A “new wave” would even be taking shape, according to experts.

This trend towards diversification would also affect Chinese companies. The latter are increasingly investing abroad, often taking advantage of favorable local policies. A movement that aims to “benefit from lower labor costs” and to “benefit from incentives” significant financial resources depending on the country.

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