Source: Apple

Apple seeks to make India a center to produce iPhones and accessories, Vietnam to assemble AirPods and Mac, Malaysia as a location for some Mac production, and Ireland to make a range of simpler products, according to Mark Gurman, a tech reporter for Bloomberg. Apple employees have been instructed to focus on sourcing additional parts and local production lines beyond China for new offerings coming in 2024, but the company still plans to maintain existing operations in China, Gurman reported on Wednesday. Apple is carefully implementing the plan to move some of production out of China as its management concerned the rapid capacity transition could trigger the government’s retaliation as well as local consumers’ backlash, according to the report.

Apple announced in last April to start making iPhone 13 in India, which seems as one of signs to highlight increasing importance of countries like India, Vietnam and Mexico for suppliers who try to improve diversification of production away from China. Five months later, Apple confirmed it was assembling iPhone 14 in India, less than three weeks from its release of the new iPhone series. The confirmation suggests India will first make the latest flagship iPhone.  

Apple is looking to scale up production of iPhone in India and make 25% of the devices there, Piyush Goyal, the Commerce and Industry Minister, revealed at a local event in January. The official said Apple has already made about 5% to 7% of its production in India, and “If I am not mistaken, they are targeting to go up to 25% of their manufacturing. They launched their most recent models from India, manufactured in India.”  

More and more Apple suppliers showed signs to shift their capacity out of China these years Foxconn, the world’s largest electronics manufacturer as well as iPhone’s largest original equipment manufacturer (OEM), was said to ramp up effort for the shift.

Apple plans to for the first time make its MacBook computers Vietnam in 2023, and has tapped Foxconn for the production in the Southeastern Asian country as early as around May, Nikkei Asia cited sources familiar with the matter in last December.

Reports last month said Foxconn was planning to invest about $700 million to build a new plant near the airport in Bengaluru, the capital of the southern Indian state of Karnataka, and mull another new production site in Hyderabad, the capital of southern India's Telangana state, as well as a silicon carbide fabrication plant and packaging facility for its semiconductor business. The key iPhone maker is also poised to expand production in its existing facility in Chennai, the capital city of the southern Indian state of Tamil Nadu, aiming to boost iPhone production from about 6 million to 20 million by 2024, and its workers there around tripling to as many as 100,000, according to the report.

Quality is a major concern as Apple is accelerating its shift plan. Only about 50% of iPhone casings produced in a factory under Indian conglomerate Tata is good enough to be sent to assembly, and the 50% yield is well below Apple’s zero-defect goal, Financial Times reported in February. The factory in Hosur was reported to planto improve proficiency but the road ahead is long. Apple has concerns about whether it can ensure high standards of quality in Vietnam and Malaysia, given the current state of the manufacturing industries in those countries, Gurman’s latest report said.

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