Apple has been trying to expand its production in India for some time now. It is essentially intended to reduce dependence on China. But reputed market analyst and one of the most active commentators on Apple developments Ming-Chi Kuo, has now said the relocation of its manufacturing operations to India poses “potential geopolitical risks”. Kuo also suggested that the ongoing problems in China could delay some products. The TF International Securities analyst predicted that setting up facilities in Vietnam over India could reduce risks and be a better option for Cupertino company.
In a thread on Twitter, Kuo pointed out that setting up manufacturing in India poses potential geopolitical risks for Apple’s contract manufacturers in China, including Luxshare ICT and Goertek, that could be mitigated by establishing facilities in Vietnam.
The diplomatic spat between the Indian government and its Chinese counterpart could prevent Apple from expanding its production in India.
Kuo also noted that Vietnam has a better production environment than most countries outside China.
China’s authoritarian communist government and its clashes with the US are possible reasons for Apple to look for an alternative. However, considerations for moving to a new country for manufacturing increased this year following Beijing’s decision to waive opposition to Russia’s invasion of Ukraine and ongoing lockdowns, as The Wall Street Journal reported, citing people familiar with the development.
Quoting the company’s report, Kuo said the AirPods Pro 2 would go into mass production in Vietnam in the year’s second half. It is considered a successful case of mass production of Apple’s key products outside of China. He added that the AirPods Pro 2 would keep the Lightning connector port instead of using the USB Type-C port that will reportedly appear on Apple products in 2023 to comply with the EU’s push for a universal charger stand.
However, Kuo noted that duplicating the successful experience of AirPods Pro 2 to other products or countries in the short term was quite challenging. The analyst also pointed out that Apple’s shift in AirPods Pro production can be attributed to its relatively uncomplicated supply chain. This suggests that the development cannot be seen as a move to leave China for products, including the iPhone models, that require highly complex supply chains.
Apple has been producing several iPhone models in India since 2017 to reduce its reliance on China and meet the growing demand for non-flagship iPhones in the country. Last month, the iPhone 13 was confirmed as the latest model to be produced in India.
However, to expand that manufacturing process, experts believe Apple is looking for a stronger domestic market for the iPhone and other Apple products and policy improvements that are friendlier to local manufacturing and exports.
CyberMedia Research reported that Apple shipped one million locally manufactured iPhone devices in the first quarter of April. The market has the potential and size to grow that number. However, an army of Android phones is the need to limit the appeal of iPhone models to the masses.