Tim Cook in a previous visit to India — image credit: Apple
Apple’s supply chain diversification plans are rolling on, albeit slowly, with its expansion of iPhone production out of China and into India still running into stumbling blocks.
Apple is currently on a multi-year journey to expand the reach of its supply chain. What was once a China-centric approach has become one that involves iPhone production in India and operations in Vietnam and other countries.
The changes are intended to minimize the risk of global or international events impacting Apple’s ability to make products to sell to consumers. With the COVID-19 pandemic causing factory issues and the continuing threat of disruption by trade wars, Apple’s need to diversify its production base is greater than ever.
However, getting to the point where it can be happy with manufacturing its products in multiple places is still a far-off prospect. According to a report from The Information, it’s still running into issues in moving its iPhone production out from China and into India.
India’s a manufacturing threat to China
The export of production out of China is a threat to the country’s economy, but it didn’t seem that way at first. Apple’s initial negotiations with Chinese suppliers to build factories in Vietnam for AirPods and the Apple Watch were viewed as favorable by Chinese officials, according to Apple supply chain members.
This was due to a combination of factors, including Vietnam’s small 100-million population, limiting Apple’s growth in the country. There was also the prospect of China seeing companies from the country expanding their international footprint.
India, however, was more of a threat to Chinese interests. The 1.4 billion people living in India equalled that of China. This allowed India to have the potential to be a viable secondary production base for major products like the iPhone, which would draw work away from China.
At the moment, India produces up to 40 million iPhones per year, about a fifth of Apple’s global iPhone production, but it won’t be that way for long. Apple allegedly wants to grow that percentage by 10% in 2025.
The end goal for Apple is to have about half of iPhone production in India and half in China. However, there are things still standing in the way of that.
The India struggle is real
Getting India up and running has been difficult for Apple, in part due to China’s unwillingness for comply.
This has taken the form of things like the border controls of India and China, clashes that saw deaths on both sides in 2020, and continued retaliation between the two countries.
This has manifested in ways that have directly impacted Apple. In one famous example, employees of Apple and its suppliers have had trouble securing work visas in India to work on improving the supply chains.
There’s also been attempts by the Indian government to block Chinese suppliers such as Luxshare from investing in India.
On the China side, authorities have talked to Apple’s supply chain partners to try and encourage them from moving lines outside of the country. They cited the risk to employment, sources said.
Over on the India side, Apple leaders in 2023 reportedly told employees to avoid looking towards Chinese companies when working out manufacturers to work with in India. Inter-country tensions were cited again.
A culture clash
There are other issues that have impacted Apple’s ability to bring more manufacturing to India. Some of it is simply due to differences in culture.
While iPhone assembly lines in China work on two 12-hour shifts, Indian labor laws force Apple supply chain partners to have three eight-hour shifts. This required employing more workers in India than China.
Though Apple did lobby governments successfully to allow 12-hour shifts, they haven’t been implemented due to worker unrest.
There were also issues getting subassembly lines working in India. The sourcing of key components at a high enough quality to be approved by Apple proved to be troublesome.
Getting machinery working was also a problem as some operating system menus were in Chinese, and so became harder to use in India.
That is, if it actually had the machinery on hand at all. Chinese authorities reportedly delayed and blocked the shipment of iPhone equipment to India, often without any official explanation.
Apple’s goal of spreading production is a noble and sensible one, especially under the current climate of US-China tariff tensions. Getting there has been a struggle so far, and probably will remain as such for quite a while longer.
