Looking to get out of China, Apple's Indian iPhone production surged last year

With Apple looking toward the day when it can move all of its iPhone production out of China, Bloomberg reports that Apple tripled iPhone production in India during the latest fiscal year which ended September 24th, 2022. More than $7 billion worth of iPhone units were manufactured in India during fiscal 2022 which means that nearly 7% of all iPhone units last year were made in India by contract manufacturers Foxconn and Pegatron. As recently as 2021, India accounted for only 1% of the global production of iPhone handsets.

The data comes from people familiar with the situation who must remain anonymous because the information is not public. These sources say that companies Apple partners with to assemble iPhone models, such as Foxconn, Wistron Corp., and Pegatron, added assembly lines at a quick rate over the last year. Those three firms together have 60,000 employees in India producing models from the iPhone 11 to the iPhone 14. By 2025, Apple hopes to manufacture a quarter of all iPhone production in India.

Apple does not want to get caught up in continuing trade tensions between the U.S. and China. In 2018, the U.S. imposed tariffs on imports from China which was really an import tax leveled on U.S. companies that had their products assembled in China and shipped to the states-like Apple for example. Then President Donald Trump reportedly told Apple CEO Tim Cook that the iPhone would be spared from getting hit by the import tax and the device was never subject to the tax.

More recently, Apple iPhone production at China's largest iPhone factory in Zhengzhou (owned by Foxconn) dropped sharply during the fourth quarter when the country introduced a COVID lockdown in some areas including Zhengzhou. Assembly line workers fled the factory's campus in droves and Foxconn tried to hire new workers; this led to violent clashes as newly hired workers felt that they were lied to by the company when it came to certain rewards that Foxconn promised to include in their contracts.

The bottom line was that Apple was short some six million iPhone 14 Pro and iPhone 14 Pro Max models which even Apple was forced to admit. And Apple's top brass no doubt noted how the company was welcomed with wide arms in India; by wide arms we mean that Apple was given special incentives by Indian Prime Minister Narendra Modi whose Make in India initiative is turning the country into a desired manufacturing center.

Some of Apple's iPhone production in India remains in the country to avoid import taxes that could raise the price of an iPhone by $100 or more. $5 million of the iPhone units produced in India were exported over the 12 months that ended in March 2023. That is four times the number exported during the previous year.

Typically, Apple would start production of a new iPhone model in China and then start some production in India. With this year's iPhone 15 line, for the first time, Apple will simultaneously manufacture some iPhone 15 models in China and India. A report in Nikkei Asia says that similar to what it is doing with the iPhone in India, Apple is looking to move production of its MacBooks to Thailand and out of China. Apple already makes some Apple Watch units in the country.

A senior executive of one of the suppliers that would be involved with Thailand MacBook production said, "Ideally, Apple asked us to set up facilities in Vietnam for MacBooks, following in the footsteps of other Apple suppliers, but we offered an alternative option of building the product at our Thailand plants, which still have a massive space that can be reserved for the client."

Besides India and Thailand, other possible locations for Apple to assemble its products away from China include Vietnam and Mexico. Apple already makes AirPods in Vietnam which has become a tech center. Any country where Apple sets up shop must have a large workforce interested in working on assembly lines. These countries must also have access to supply chains that can deliver components to Apple in the quantity and quality it needs.