What Forcing Apple’s Contract Manufacturers to Move their Bases Completely out of China; Define Analysts

Published  December 29, 2022   0
S Staff
Mobile Manufacturing

It’s more challenging for key component suppliers to move to India, compared to how big manufacturers like Foxconn or Wistron can shift their production

Since the time of the COVID-19 pandemic, several global electronics manufacturers have been looking forward to shifting their manufacturing bases out of China and set-up in India, Vietnam and other Asian countries. In fact, the Cupertino tech giant’s contractors are also willing to shift their bases in India, but global analysts have opined that this strategy will not be fruitful for them because they will not achieve any economies of scale in the South Asian countries in the coming few years.

This is due to the fact that the volume of electronic parts suppliers from China are very less who have established a sturdy presence in India to assist Apple’s major contract manufacturers such as Foxconn Group, Pegatron, and Wistron. Ivan Lam, a senior analyst at Counterpoint Research, told the media that there are a handful of Chinese component suppliers operating in India and that includes Shenzhen Huaxing Photoelectric Technology, Sunwoda Electronic Co and Sunny Optical Technology Co. They are able to carry out their operations in the country successfully because they also do their trade with Vivo, Xiaomi, and Oppo. The point to be noted is that India is now the world’s second largest smartphone market in terms of sales.

Lam told the South China Morning Post, “It’s more challenging for key component suppliers to move to India, compared to how big manufacturers like Foxconn or Wistron can shift their production. If these component suppliers only have a single client in the country, setting up shop there might not be the most economically sound move to make.” The biggest impediment of Apple’s contract manufacturers is getting sufficient volume of component suppliers to set-up their units in India. Secondly, the COVID-19 challenges in the heart of China forcing these companies to move out of the country and expand their supply chain networks in other Asian countries.

On the other hand, Bloomberg Intelligence added that in China 98 percent of iPhones are currently manufactured and hence, it will take more eight to ten years to move operations out of the country Upasana Joshi, research manager of client devices at research firm IDC India stated that Apple's supply chain is completely dominated by the Chinese manufacturing companies and she also added that a wholesale shift of iPhone production from China to other countries in Asia “doesn’t look like a viable solution right now for Apple and its various suppliers.”

According to an exclusive report of the South China Morning Post, the Indian government is now undertaking various efforts to bring various component suppliers to the country because it will be easier for the contract manufacturers to expand their operations in the country. A couple of days back, an exclusive report of Times of India added that the government has been involved in deep discussions with the Apple contract manufacturers so that the Chinese component suppliers could set-up their JVs in the country. T