The supply chain for assembling Apple’s iPhone smartphones began collapsing due to rising US-China tensions, the source reported. Bloomberg. And although China now has about 80% of Apple’s manufacturing partners, the company continues to diversify the production of components and distribute them in different countries.
However, China remains a key hub for Apple’s supply chain for now. And the number of partners in the country has remained almost unchanged since 2012, despite having production sites across Asia. According to the source’s report, the list of top suppliers producing components for iPhone, MacBook and other Apple devices in 2022 included 188 companies.
India and Vietnam have emerged as the most popular new delivery hubs for Apple components in a decade since the company began publishing its list of suppliers. Both countries have relatively low labor costs. In addition, India offers financial incentives for suppliers and increases import tariffs for companies that do not manufacture locally, while Vietnam attracts tech producers with tax breaks and free land leases.
India currently produces about 7% of all iPhones and has tripled production in the last fiscal year. Overall, the country’s electronics exports have quadrupled since 2018 to $24 billion last year. As for Vietnam, the electronics industry accounted for 32% of its exports last year, about double what it was a decade ago.
It is worth noting that US policies aimed at stemming China’s technological rise are accelerating the relocation of manufacturing by the industry’s main players from the Middle Kingdom to other parts of Asia. The tightening of sanctions policies and the “tariff war” during Donald Trump’s presidency have significantly accelerated the trend towards Apple’s exit from China, although the conditions for this were in place long before that.
Many companies started looking for a location for new manufacturing bases when China started raising wages due to rapid economic growth. During this period, the governments of India, Vietnam and other countries actively developed their businesses by offering investment incentives, reforming wages and improving infrastructure. However, there are risks for Apple in India and Vietnam, as basic services like electricity and water are less reliable in these countries than in China and Apple’s own supply chain ecosystem is less developed here.
Also, the diversification of production increases the risk of delivery delays and increased costs, which can lead to higher prices. “The problem with that is that you’re fragmenting supply chains that are already very efficient. said Jeffrey Jaensubhakij, chief investment officer at Singapore-based sovereign wealth fund GIC Pte. — This will drive up costs and therefore further fuel inflation over time.”