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iPhone production in India continues to expand, factories here are expected to double their annual export value to $2.5 billion (equivalent to nearly 60 trillion dong). Apple wants to expand its manufacturing efforts outside of China, in order to reduce the risk of supply chain disruptions or geopolitical issues.
India dreams of becoming “world’s number one factory”
Its manufacturing activities in India are increasingly promising, iPhone export turnover in this country has reached a new milestone. According to sources, shipments from India have crossed the $1 billion mark since April and at the current rate, the value of outbound shipments is expected to reach $2.5 billion by March 2023.
$2.5 billion in value compared to $1.3 billion in iPhone exports over the 12-month period, from March 2022, showing significant growth in a short period of time. The strong and sustainable growth shows that India is gradually taking an important position in the strategy of American companies globally.
The Indian government is also bringing a $6.6 billion preferential financing program to smartphone manufacturers in 2020, in an attempt to boost domestic production. In addition, companies that outsource Apple have increased their presence in this country in a short period of time taking advantage of this program.
Although India only accounts for a small proportion of iPhone production, the increase in exports is a “good omen” for Prime Minister Narendra Modi’s plan to turn the country into the world factory. Apple is looking for alternatives to China amid escalating US-China tensions and a nationwide lockdown due to Covid-19 affecting economic activity.
Navkendar Singh, an analyst at research firm IDC, said the healthy growth in production and export scale shows that India is gradually taking an important place in Apple’s China + 1 strategy. Currently, main contractors Foxconn, Wistron and Pegatron are producing iPhones at factories in southern India. All three are entitled to incentives under the government plan.
According to Bloomberg, China is still far ahead of India at the moment. In 2021, about 3 million iPhones will be assembled in India, compared with 230 million in China.
In addition to smartphones, India also plans to promote financial incentives for tablet and laptop manufacturers, hoping to attract Apple to assemble MacBooks and iPads here as well as other brands. But leaving China – where Apple has built a complex supply chain for nearly two decades – is not easy. A Bloomberg analysis found that it takes about eight years to move about 10% of Apple’s production out of China, which is responsible for 98% of iPhone production.
What competitive advantages does Vietnam have?
Direct competition in the production and assembly of Apple electronic products with India is Vietnam.
Factories in Vietnam produce many important products in the global mobile market, including a range of devices from Samsung, Xiaomi, and Apple’s AirPods. Since the beginning of this year, a lot of information from the supply chain shows that a number of other Apple product lines such as Apple Watch, iPad, and MacBook have also been gradually moved to Vietnam.
Apple currently has 25 partners with factories in Vietnam, accounting for 13.9% of the total 190 suppliers as of the fourth quarter of 2021. Most are familiar names, such as Foxconn, Luxshare or component suppliers such as Samsung, Intel, and LG.
At the end of September, a report from JP Morgan stated that Vietnam will become an important manufacturing area for Apple, supplying 65% of AirPods, 5% of MacBooks, 20% of iPads and Apple Watch, by 2025.
According to Nikkei Asia, Vietnam has a technology export growth rate that no other Southeast Asian country can match, with the share of high-tech exports reaching 42% in 2020, a sharp increase from 13%. in 2010. But very few of these exports contribute to the country’s economic growth.
Vietnam has many advantages compared to other countries such as a highly disciplined, cheap labor force and good economic development policies. However, our country also has many other obstacles such as unqualified labor and lack of technical equipment.
However, the difficulty of Vietnam is the lack of companies that play the role of major partners in the supply chain. In fact, among the existing Apple suppliers, there is not a single Vietnamese establishment. “The question is whether Vietnam can fulfill its own potential, or just as an ‘assembly platform’ valued mainly on cheap labor,” according to the Financial Times.
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