William Gallagher
Apple's radical Indian iPhone production expansion will take years to hit 50% of global demand, but component suppliers in China are already seeing the impact.
Previous claims of Apple looking at giant India expansion for its manufacturing, and specific iPhone 15 trial production reports, are having an effect in China.
According to the South China Morning Post, Apple's moves are already affecting the stock value of Chinese firms involved in all of Apple's devices.. It attributes component supplier Goertek's loss of AirPods orders to the move, for instance, and with it the company's 60% earnings forecast drop.
South China Morning Post also says that Ofilm,maker of camera components, has seen sales and profits plunge. However, that was because Apple ceased all orders once Ofilm was placed on the US sanctions list over human rights violations.
The publication reports that in contrast, India's iPhone shipments doubled between April 2022 and December 2022, compared to the same months in 2021.
That still accounts for less than 5% of the total, but the South China Morning Post cites a Taiwan-based analyst predicting that it could rise to 50% of all iPhones by 2027.
Previously, JP Morgan analysts have forecast 25% of all iPhones will be made in India by 2025.
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4 Comments
Critica have argued that Apple needed to move quickly, but it’s like turning a supertanker; it takes time. But we now see that the shift is definitely underway, and China will feel the impact the most. The benefit will be spread to a number of other countries not just India. I think Apple is smart enough to not get caught in the single source trap again.
As always, the media (and stock markets) overreacting - the world isn't black and white or zero sum. Yes, Apple is definitely turning to India to diversify its supply chain. As Covid-19 lockdowns have shown, Apple needs alternatives from the single-country solution that is China. But that doesn't necessarily mean Chinese manufacturers are in trouble. Even though Apple is huge, it is still growing in the 10% range, so even a diversification away from China could still leave Chinese manufacturers with plenty to do. And, I think, this is a very slow process. Even as some manufacturing and assembly is moving to India, India doesn't yet have many of the parts needed in assembly, so they'll still be coming from China for a long time.