Apple could be looking to increase production in India but its geopolitical tension with China might hinder the process, says analyst

• Apple may boost manufacturing capacity in India and Vietnam for upcoming iPhone production.
• Reports suggest that China’s strict Covid measures led to huge losses for Apple.
• Due to restrictions and supply chain challenges in China, the company aims to shift its production to other countries.

Amid strict anti-Covid measures in China, tech giant Apple is reportedly considering increasing the production of iPads, iPhones, Macs and other products outside China. According to the WSJ report, the iPhone maker has told some of its contract manufacturers that it wants to boost production outside the country, India and Vietnam could be the alternatives.

It is being said that India and Vietnam could be the potential alternative to China as these countries already have a small proportion of manufacturing capacity for Apple. India is looked at as next after China as it has the second-highest population and lower labour cost.

Based on the speculated development, reputed market analyst Ming-Chi Kuo said that the move to shift its manufacturing operations to India carries “potential geopolitical risks” as more than 90% of Apple products are manufactured in China. Whereas, the Chinese government has geopolitical issues with the Indian government. These issues can be some upfront challenges for Apple to set up a China-based manufacturing contractor in India.

Before the pandemic, Apple was seeking to step out of production from China but the spread of Covid-19 stumbled the plans. Now with the recent developments, tech giant is pushing contractors that they should be looking to build new manufacturing units outside China.

Recently, strict lockdown restrictions in Shanghai and other parts of China have bottlenecked the supply chain which may hinder Apple’s sales by $8 billion in the current quarter.

Following clashes between India and China, ongoing diplomatic tensions, ban on Chinese apps and multiple raids over Chinese companies are some of the publicly known reasons that Apple’s China-based assemblers may not be able or want to shift production to India. However, Indian government has been pushing a production-linked incentive (PLI) scheme from which Apple can be benefitted.

Currently, Apple is the second-largest exporter of handsets in India. India produced 3.1% of iPhones last year. Also, company has started the production of iPhone 13 in India with manufacturing partner Foxconn. In 2021, Apple has recorded the highest revenue in handsets touching nearly $2.09 billion in India while Samsung touched $2 billion.

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