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Apple’s Global Supply Chain: The Tale of India & China

Apple's global supply chain is one of the most iconic and influential in the world. Over 40 countries and regions across the globe, Apple maintains a wide network of suppliers, distributors, and resellers. Of particular importance to the global supply chain is the relationship between India and China. Each country contributes differently yet complementary to Apple's worldwide production process.

Apple's Fourth Quarter Revenue Down 5% Year-over-Year

According to the financial report, Apple’s revenue in the fourth quarter of 2022 was US$117.154 billion, a year-on-year decrease of 5%; net profit was US$29.998 billion, a year-on-year reduction of 13%. Apple’s revenue in five major global markets declined year-on-year in the quarter. Among them, the Greater China revenue was US$23.905 billion, a year-on-year decrease of 7%.

Market research firm Canalys recently released a report stating that in the fourth quarter of 2022, iPhone shipments in the global market were 73.2 million units, a year-on-year decrease of 11%; in the Chinese market, iPhone shipments were 16.4 million units, a year-on-year reduction of 24%.

Under the sluggish financial report, the iPhone started a price cut war.

Apple CEO Cook said that the decline in revenue was mainly due to the limited supply of mobile phones and the "China production problems of iPhone14Pro and iPhone14Pro Max", which limited Apple's market demand. In October 2022, the Foxconn factory in Zhengzhou entered closed-loop production due to the impact of the COVID-19 epidemic; on November 7, Apple issued a statement saying that the epidemic temporarily affected the production of iPhone14Pro and iPhone14Pro Max, the main assembly plant in Zhengzhou. ".

Apple Continues To Increase Production Capacity in India

Apple has been assembling older mobile phones in India since 2017, and Apple is gradually increasing iPhone 14 production in India by establishing more local suppliers. Three Taiwan-based Apple suppliers produce apples in India: Foxconn, Wistron, and Pegatron.

Among these companies, Foxconn has the highest "sense of presence" in India. Foxconn opened a factory in the southern Indian state of Tamil Nadu in 2019 and has been increasing its capacity. Beginning this year, Foxconn's Indian factory began producing iPhone 14, a significant advancement for India's smartphone foundry industry. The sources said that Foxconn plans to increase the number of employees at its southern India factory by 53,000 to 70,000 over the next two years.

At the same time, India also hopes to expand other Apple businesses apart from the assembling business. Two government sources added that officials in Tamil Nadu are pushing Apple suppliers to expand the market in India, hoping to grow their business in India.

According to India Economic Times, Apple opened an online store and launched an Apple retail store in India in September 2020. In the future, it plans to establish a design and development center in Bangalore.

According to the latest forecast from DigiTimes Research, India is expected to account for 50% of Apple's global iPhone production capacity by 2027, more aggressive than JP Morgan's earlier forecast that India would assemble 25% of the world's iPhones by 2025.

Can "Made in India" Replace "Made in China"?

In May 2022, India and the United States launched the "Indo-Pacific Economic Framework" to accelerate the economic integration of India and the United States, with the intention of "replacing China."

At the same time, Indian Prime Minister Narendra Modi is actively promoting the transfer of global industrial and supply chains to India and pushing multinational companies to set up factories in India. The Indian government has introduced subsidies of up to 500 billion rupees and allocated about 461,000 hectares of land across India for use by related companies.

Modi also "opened a small stove" for Cook. The Indian government has proposed providing Apple and its affiliates with 25% financial incentives for capital expenditures and building infrastructure such as roads, electricity, and water supply.

Compared with Southeast Asian markets such as Vietnam and Thailand, India's advantage in attracting Apple is mainly due to several factors.

First, India's vast young population can provide ample cheap labor. According to official data in India, more than 65% of the country's working population is under 35.

Second, India is the world's second-largest mobile phone sales market and the world's second-largest mobile phone producer, with huge development potential. In the current Indian mobile phone market, Chinese manufacturers such as Xiaomi, Vivo, Realme, and OPPO occupy most of the market share, while Apple only has a 4.4% share. At the same time, India's mobile phone exports are second only to China, becoming the world's second-largest mobile phone exporter. Most of the mobile phones sold by Chinese manufacturers are low-priced mobile phones. Apple's current price is relatively high, and it is expected to gain a larger market share through discounts.

Third, the Indian government has also introduced incentive policies to attract foreign capital to expand the localized production of smartphones. Previously, Xiaomi, Vivo, and Samsung all built factories in India, which has cultivated an excellent electronics manufacturing ecology and a good technical atmosphere for India. At this time, Apple building a factory in India can get more financial incentives and save the cost of training labor.

Currently, Apple has more than 180 suppliers. As of September 2022, the number of Apple suppliers in the United States has dramatically increased compared with a year ago. But currently, Chinese companies still account for about 150 companies, and 90% of Apple products are produced in China. Due to China's robust supply chain capabilities will take at least eight years, even if Apple transfers 10% of its production capacity from China.

The participation of Chinese and Indian suppliers in the division of labor in Apple's global supply chain reflects the division of work in the global industrial chain supply chain and the manufacturing level of the two countries.

India provides Apple with a number of resources and skilled labor, while China is the powerhouse of manufacturing, producing the vast majority of components and finished products. Together, these two powerhouses create a robust and reliable supply chain that allows Apple to bring its cutting-edge products to consumers worldwide.

There are significant risks if a company relies on a large company for its primary business.

Similarly, the risks should not be underestimated if a large company depends on a large manufacturing country for all its industrial chains and supply chains.

How Apple can find a new balance under the new international ecosystem is a question worthy of Apple's deep thinking.


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