The world’s largest contract manufacturer of electronic devices stealthily finalized arrangements to move part of its MacBook and iPad manufacturing to Vietnam, as China was closing its doors to survive the surge of Covid-19 infections occurring across the country. Over the past few years, international producers have been reducing their dependency on China across a variety of industries, which has helped to bolster China’s reputation as “the world’s factory” for everything from apparel to aircraft parts.
Everything you need to know about Apple’s decision!
Similar changes are taking place throughout Apple’s supply chain, with India experiencing the most substantial changes. Since 2017 Apple has hired Wistron Corp. of Taipei to build the iPhone SE in India. The most valuable business in the world stepped up its Plan B in September, stating that it would manufacture the newest iPhone 14 in India within weeks of its global release. In other terms, the company significantly aided India’s transition from manufacturing obsolete models to producing the most recent versions.
China is currently far superior to Vietnam and India. The share prices of Apple suppliers that are traded publicly are being significantly impacted by the shifting supply chain. During the initial 2 trading days of the new year, Luxshare Precision Industry, a manufacturer of cables, connectors, and chargers, connectors used in Apple devices, saw a rollercoaster trip on the Shenzhen stock market.
On January 4, it was reported that the company had reduced its production orders for the $169 AirPods, for which Luxshare is a leading supplier, and its shares fell by 9%. The stock shot up the next day after the Financial Times revealed that Apple has chosen the Dongguan-based company to produce iPhones. A consistent list of winners and losers results from Apple’s modifications to its suppliers in accordance with US legislation and in reaction to consumer and technological demands. The widening of supply chains has been driven by recent changes in China. The winners appear to be Vietnam and India, which may eventually dethrone China as the world’s most populous nation.
By 2027, India may manufacture one in every two iPhones sold worldwide, up from the present level of less than 5%. From April to December 2022 compared to the same time in 2021, the number of iPhones shipped to India doubled. As contractors, especially Chinese ones, hurried to establish operations there, it is anticipated that Vietnam will produce an increasing percentage of MacBooks and AirPods.
China continues to be one of Apple’s major sales markets and is experiencing rapid sales growth. Apple experienced 36% growth in China’s third quarter of 2022, while all of its major local rivals, from Oppo to Xiaomi, experienced a decline in sales over the same period.
Chinese vendors have shown their ability to compete in a few markets. Apple apparently thought about utilizing the Chinese memory chip, but the idea was scrapped. In a new indication of Apple and China’s dependence on one another, Chinese screen manufacturer BOE defeated Samsung Electronics to secure the majority of orders for the new iPhone 15 series displays for the second half of 2023. BOE intends to invest $400 million in Vietnam to construct two factories.
There have been a variety of adjustments made to Apple’s supply chain. Apple has switched orders between various Chinese suppliers. Apple chose Luxshare to fulfill orders for some iPhone Pro models that would have gone to Foxconn. Additionally, it has switched orders between suppliers in other nations, particularly after the Tata Group bought a nearby plant from Wistron. Examples of this include the Foxconn facilities in China and Vietnam.