Will India Become the Top Manufacturer of Apple Products?

Will India Overtake China as Apple's Main Production Hub?

Apple is well known for being the world's largest company, though it's not without problems. For most of its history, it relied heavily on China and other Asian countries to develop its products. While China has been the company's most prominent manufacturer, India may soon claim that title.

Apple and China's Partnership

Apple and China have long had a productive partnership. The company was recently declared the most profitable in the country, beating home-grown ventures such as Huawei. The high profitability is due to a combination of factors, including Apple giving in to demands from the Chinese government that tech companies haven't.

For almost all of Apple's history, it's relied on China for manufacturing. The world's most populous country has produced a significant percentage of Apple's products for a few decades.

The partnership is mutually beneficial. Apple gets its products manufactured reliably and efficiently. By staying in line with what the Chinese government demands, the company also gets to sell its products to the world's most populated country. China receives a large number of reasonably well-paid jobs - around three million - along with the prestige of hosting such a huge international company.

An End to the Partnership?

In recent years, however, cracks have formed in the Apple-China partnership. Apple has been steadily pulling production out of the country and looking elsewhere for manufacturing bases.

The unsteadiness occurred mainly because of geopolitics and how erratic things can be in China. China has yet to return to normal following recent events. The current policy dictates that entire cities can be locked down in case of emergency or infectious outbreaks. Lockdowns make production unreliable and can cause significant delays and backlogs, which are things Apple doesn't want.

Looking to India

Apple has reportedly shifted some of its iPhone production to other countries. One of them is India. In September, Apple unveiled its two new iPhone 14 models: the regular iPhone 14 and the larger iPhone 14 Plus. Both of these are going to be manufactured in India, though not exclusively.

Apple wants to move roughly 5% of its iPhone production out of China into India by the end of 2022. Later, the company wants a quarter of its manufacturing conducted outside of China by 2025. It still plans to continue its partnership with China but reduce its reliance on the country to steady its supply chain and improve reliability.

Will India Overtake China?

Unless something drastic happens, it doesn't look like India will soon replace China as Apple's top manufacturing hub. However, this could still happen someday. In the immediate future, however, China will still be producing most of Apple's products. The Indian government naturally wants to develop its partnership with Apple further.

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The Future

Suppose things don't improve in China and the country's relations with the US worsen. Apple could then lessen its reliance on China. If this were to happen, India could eventually overtake China or command a much more significant share of Apple's manufacturing. Should things improve, could Apple move production back into China? It's unclear what the company would do, given that it invested in facilities elsewhere.

One thing's certain: Apple doesn't want to let go of China completely. There's too much financial risk should the partnership be severed entirely. Therefore, the company will always have at least some manufacturing in China.