Posted on 05/11/2020 8:51:52 AM PDT by SeekAndFind
The COVID-19 pandemic has disrupted supply chains of companies around the world and has made some of them reconsider the chain as this reliance on Chinese manufacturers has revealed vulnerabilities during the current situation. Hence, looking to diversify its production, Apple is reportedly looking to move nearly 1/5th of its production from China to India.
A report by ET reveals that Apple executives have been in touch with Indian government officials for the last few months and are now considering the possibility of moving a considerable chunk of their manufacturing operations to India through Apple’s contract manufacturers.
"We expect Apple to produce up to $40 billion worth of smartphones, mostly for exports through its contract manufacturers Wistron and Foxconn, availing the benefits under the production-linked incentive (PLI) scheme," a senior government official told ET.
For the uninitiated, the PLI scheme was recently introduced by the government to boost domestic manufacturing of mobile phones and specified electronic components. For a company to take benefit of the scheme that provides an incentive of a 4-6% on incremental sales (subject to conditions), the company must manufacture at least $10 billion worth of mobile phones in a phased manner between 2020 and 2025.
The report points out how far Apple currently is from achieving that number. Apple currently sells smartphones worth approx. $1.5 billion in India out of which only $.0.5 billion is manufactured in India.
Apple already manufactures older iPhones, like the iPhone 7 and the iPhone 8, in India via Winstron and Foxconn. It recently also started the production of the iPhone XR in India. These phones are manufactured in India to support the local demand and the demand of nearby markets.
If Apple does move a huge chunk of its manufacturing operations to India - to diversify its supply chain - it could also benefit from saving on import duties that are slapped on iPhones that aren’t manufactured in India. India is the second-largest smartphone market in the world and Apple has a share of a mere 2% in the country. Manufacturing its latest smartphones here will help the Cupertino-based giant price their smartphones more competitively in what is probably the most important smartphone market in the world right now.
Although, it isn’t smooth sailing yet. The report also points out that there were some “irritants” for Apple in the government’s PLI scheme. But if all goes well, and Apple does decide to move its manufacturing to India, it could provide a huge impetus to the “Make in India” programme and inspire other companies to follow suit.
Apple currently sells iPhones worth $1.5Bn in India, of which less than a third are locally manufactured, whereas Apple is a top investor in the manufacturing sector in China and produced merchandise valued at $220 Bn in China in the financial year 2018-19. According to an Economic Times report, Apple senior executives have held several rounds of meetings with top-ranking government officials over the last few months.
The report also suggests that Prime Minister Narendra Modi had also met top executives from tech giants like Apple, Samsung, homegrown phone maker Lava, on December 28 2019, to start the process. The government believes that other smartphone manufacturers like Samsung, Vivo and Oppo may also start applying from next week, once the guidelines are out. The scheme will kick in from August 1.
Anything that hurts Chiner economically is welcome, but my inner 1950's ask why not move that production to the good old USA?
In other words, Apple plans to keep 80% of its production in China.
Hurray for Apple. Not.
The key word in the whole article is “considering.”
And why stop at 20%? A mere fraction.
Sounds like more of a negotiating ploy to get China to lower the cost on the full 100% to me.
Will Apple relive the Union Carbide, Enron and Nokia experience in India? Time will tell.
Right.
Timmy The Rump Ranger couldn’t possibly move that production to say, Tucson or Salt Lake or Phoenix or (gasp) Missouri or even Alabama, the state that he grew up in.
Nope. Gotta go to East Asia.
But he shonuff likes the Big Bad Ol’ US military out there defending his property, and his army of attorneys enforcing his IP rights in US courts.
And he really likes living in Palo Alto along with his compadres in Cupertino. Because the lights stay on, he doesn’t get hung from a rooftop like he would in Pakistan or Iran, or even Chiner...all those little things.
Whatta pig.
“”We expect Apple to produce up to $40 billion worth of smartphones, mostly for exports through its contract manufacturers Wistron and Foxconn, “
Yeah make it in India and export to USA
Apple board member Algore approves while sitting on a mountain of AAPL stock acquired at a fat discount.
Just 20%?
Get it all out of China.
Because Americans won't work for 50 cents an hour, and raising production costs to pay US wages would hurt their bottom line and the stock price.
There are plenty of regions in the United States that have low wage labor costs that when factored in with the cost of international shipping and other costs/difficulties from offshoring would make manufacturing in the US a viable option.
The crux of the problem is that Apple isn’t really an American company anymore. It is a multinational and its concerns are no longer aligned with the wants and needs of the people who live in United States. It is time to tariff the products of “American” companies that manufacture offshore and force them to do right.
Easy fix. Just don’t buy Apple’s compromised hardware crap. Problem solved.
Where would India and China be today if American businesses didn’t build their economies at the expense of the American worker?
If they actually move 20% that is significant..and could actually just be a start?
And who else will join them?
Corning has made the glass for iphones for over a decade now.
Anyhow, 80% is better than 20%.
Once Apple adds up the overhead costs of bribery in India they might back out.
C.W.
So what brand of electronics should one buy? Which phone is made in the USA?
Shipping just isn't that expensive. Adds a couple of bucks, tops, the the cost of a $700 phone.
Plenty of places in the USA just as cheap as India.
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