Bored with the ‘iPhone city’, Apple wants to ‘leave the town to the village’: Asking partners to ‘actively’ move to Vietnam, India

Citing an inside source from Apple, the Wall Street Journal reported that Apple is speeding up plans to move some production activities outside of China.

The company is said to have asked its suppliers to plan “actively” to assemble its products elsewhere in Asia – primarily India and Vietnam, as the company is looking to reduce disruptions. depends on Taiwanese assemblers led by Foxconn.

According to analyst Ming-Chi Kuo of TF International Securities, the company’s goal is to shift 40-50% of iPhone production to India, compared with the current rate of less than 10%. Vietnam is also expected to take on the production of other Apple products such as AirPods, Apple Watch or MacBook.

The iPhone city was once the pride of Apple, but its heavy reliance on China is costing Apple.

This decision was made after turmoil broke out in the “iPhone city” of Zhengzhou (China), where 300,000 workers assemble iPhones and other Apple products operated by Foxconn. This factory assembles up to 85% of the Pro-series iPhones, according to Conterpoint Research.

In November, severe production disruptions occurred here when workers were upset about income issues as well as Covid-19 restrictions. This poses a risk to Apple, which sees it as a stable manufacturing hub.

“Apple no longer feels comfortable when its business is tied up so much in one place,” the report from the WSJ said.

“In the past, people didn’t care about the risk of centralization,” said Alan Yeung, a former Foxconn director in the US. Free trade is the norm and everything is predictable. Now we have entered a new world.”

An Apple supply chain company said it was “looking at” several major assemblers to make decisions. There are two Chinese companies that are preparing to have more business with Apple, Luxshare Precision Industry and Wingtech Technology.

During investor meetings earlier this year, Luxshare executives said some of their consumer electronics customers are worried about supply chain disruptions in China, power shortages and a number of other problems. They said these customers want Luxshare to expand its assembly operations outside of China.

Neither India nor Vietnam have a perfect supply chain like China. Therefore, it will take a lot of work for Apple to move production to these countries.

However, concerns revolve around the fact that Apple will introduce a new product (NPI) once a year, requiring contractors to work closely with them to turn designs and prototypes into a production plan. detail export.

This means that, unless places like Vietnam and India can achieve a superior NPI, they will still be “stuck as a stuntman”, according to supply chain experts.

Currently, consumers are faced with not having an iPhone to buy right in the Christmas season. According to statistics, the time users have to wait after ordering to buy iPhone 14 Pro, Pro Max is the longest in the 15-year history of this product.

According to Kup, a supply chain analyst, Apple may sell 70-75 million iPhone units in the fourth quarter of this year, 10 million less than previous predictions.

“Apple will have to find an alternative to the iPhone city. They will have to expand, creating more ‘villages’ instead of focusing on one big ‘city’,” said Dan Panzica, a former Foxconn executive who now advises supply chain companies. good.