Apple is well-equipped to deal with any possible Chinese iPhone production restrictions

Apple is well-equipped to deal with any possible Chinese iPhone production restrictions
Huawei is the most obvious victim of trade tensions between the US and China that are showing little signs of de-escalation, but directly or indirectly, Apple's lucrative smartphone business could also be negatively impacted by this whole unstable and unpredictable political kerfuffle.

While CEO Tim Cook seems unconcerned by speculation the Cupertino-based tech giant might find itself "blacklisted" in the near future in the world's largest smartphone market, it certainly doesn't hurt to have a backup plan. Just ask Huawei, which reportedly started working on a contingency program for a prospective US ban a full seven years ago, still needing more time to finish its Google-excluding Android replacement.

Of course, Apple won't be able to do much if China restricts its iPhones from selling in the region, but as far as local production is concerned, Foxconn appears to think a backup plan is not that hard to execute.

An entirely India-made iPhone lineup?


For those who don't know, Hon Hai Precision (aka Foxconn Technology Group or just Foxconn) is currently the world's largest contract manufacturing company. Its list of clients is long, eclectic, and incredibly impressive, including Xiaomi, Nokia, Amazon, Sony, Microsoft, Motorola, and Google (to only name a few). But Apple's iPhones and iPads are arguably the most important products manufactured by Foxconn in, you guessed it, China.

Most of Foxconn's factories are located in China, even though the company is headquartered in Taiwan, but in recent years, the tech giant has been making great efforts to expand and diversify its international operations, from Brazil to Turkey, India, and the US. While the controversial Wisconsin plant expected to start production by the end of 2020 is unlikely to host iPhone assembly lines anytime soon, Foxconn and Apple have their sights set on ramping up handset manufacturing in another major smartphone market.

 

Namely, India, where Apple has barely kicked off production of older iPhone models recently after years of local government negotiations. But persistent rumors have been calling for higher-end and newer models to be manufactured in the country soon, and a senior Foxconn executive is adding fuel to the speculation fire today.

According to board nominee and semiconductor division chief Young Liu, Foxconn can "help Apple respond to its needs in the US market", with "enough capacity" outside of China to meet demands made in the aftermath of a possible local embargo. In other words, Foxconn could single-handedly manage all iPhone manufacturing operations for US sales without breaking any restrictions the Chinese government would be inclined to impose in retaliation for Trump's Huawei-crushing decisions.

Killing two birds with one stone


If China does end up forcing Apple's hand (which continues to seem unlikely), shifting iPhone production to India could prove a blessing in disguise for the world's third-largest smartphone vendor. Local prices are likely to drop for more variants, government incentives and tax breaks might rise as new jobs are created, and sales numbers would undoubtedly thrive as well.


Right now, Apple's share of this massive market is almost negligible, which has had a crucial contribution to the company's shrinking global shipment scores and stagnant profits. In an ideal scenario, Cupertino would want to maintain its Chinese operations and slowly expand its India business, but if the former will not be allowed, rapidly boosting the latter could help offset any losses.

It's also important to point out that Foxconn is not the only contract manufacturer expected to give Apple a hand in dealing with any prospective China "problems." After all, the first iPhones made in India come from a different company called Wistron. Bottom line, Apple will probably be fine whatever the trade war lies in store.

FEATURED VIDEO

12 Comments

1. User123456789

Posts: 885; Member since: Feb 22, 2019

Even if manufacturing prices drop in case Apple is forced to go to India, none is innocent to believe final prices of Apple stuff would drop too ...

3. Leo_MC

Posts: 7432; Member since: Dec 02, 2011

I paid 0€ for my 2018 iPhone; how low do you want the prices to go?

4. User123456789

Posts: 885; Member since: Feb 22, 2019

Did you buy unlock cellphone like most of people around the planet? I dont think so.

8. Leo_MC

Posts: 7432; Member since: Dec 02, 2011

Why would I do such a thing when I can have my carrier pay for my phone?

6. ph00ny

Posts: 2028; Member since: May 26, 2011

Did you pay 0 for your iphone from apple? That's like saying i paid price of one s10+ for two from AT&T

9. Leo_MC

Posts: 7432; Member since: Dec 02, 2011

I got a free iPhone and a reduction in the monthly cost for my personal mobile line. The invoice was for 650€ (730$) + VAT, which is cheaper than the price of the phone in US; I just have to pay (24-no. of months since I signed the deal)*(650/24) and I close the line anytime I want. That's 10€ (+VAT) I save every month when compared my deal with purchasing from Apple. I got the phone 1 mo. after the release.

7. Valdomero

Posts: 670; Member since: Nov 13, 2012

Contract doesn't count, you're still paying but in comfortable monthly payments.

10. Leo_MC

Posts: 7432; Member since: Dec 02, 2011

XR was the best deal I got for an iPhone. I also got great deals for a bunch of 6s devices in my company, but I got 1y old devices and with a business plan (fixed internet, telephony, vpn etc).

2. tokuzumi

Posts: 1894; Member since: Aug 27, 2009

The move away from China as a manufacturing center is inevitable. Wages there are on the rise, which means profit margins will shrink or prices will need to rise. If you move production where wages are still low, companies can maintain profit margins without having to hike prices too much.

5. iloveapps

Posts: 855; Member since: Mar 21, 2019

I don’t care about the price as long as apple keeps my data secure and private. Im not an android user who whines every penny spent.

11. Alcyone

Posts: 365; Member since: May 10, 2018

I guess I need to whine about the corporate discounts I have access too. Sucks, being able to save money on things, especially when not everyone qualifies.

* Some comments have been hidden, because they don't meet the discussions rules.

Latest Stories

This copy is for your personal, non-commercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers at https://www.parsintl.com/phonearena or use the Reprints & Permissions tool that appears at the bottom of each web page. Visit https://www.parsintl.com/ for samples and additional information.