India and Vietnam are emerging as Apple Inc.’s next manufacturing hubs in view of assembly partners trying to add resilience to a supply chain heavily concentrated in China and disturbed by its geopolitical and health challenges.
Counterpoint Research analysts Ivan Lam and Shenghao Bai point out that key electronics manufacturers are diversifying their production globally, making use of local incentive policies. The effort of many years, beginning before the COVID-19 pandemic and lockdowns that shook China, may see leading partner Hon Hai Precision Industry Co. , also known as Foxconn, shift as much as 30% of its capacity to India and Vietnam and Brazil, they experts add.
While a direct replacement for China is not immediately in the cards, Taiwanese assemblers such as Hon Hai and Pegatron Corp. are putting the foundations in place to handle more of the final assembly and packaging of products outside the country. “Led by Foxconn and Pegatron, companies have already invested in factories, production lines, relatively advanced manufacturing processes, and personnel training in India,” the experts wrote.
India’s vast population and high birth rate make the country an attractive market for end-products and a manufacturing base, while Vietnam’s workforce offers lower labour costs than Chinese. According to Counterpoint’s research, smart phones manufactured in India grew 16% in the second quarter of this year, reaching more than 44 million units.