Advantage India As Major Apple iPhone Assembler Looks To Diversify Bulk Of Production Away From COVID-19-Hit China: Analyst

Zinger Key Points
  • China, often referred to as the world's factory, could soon cede its dominant positioning in manufacturing.
  • Apple is slowly and steadily reducing its reliance on China for producing its hardware products.

China is a vital cog in Apple, Inc.’s AAPL wheels, both from the demand and supply perspective. With the country going on and off rigorous COVID-19 lockdowns, it has become an unreliable place to concentrate production.

What Happened: Hon Hai Precision Manufacturing Company Limited HNHPF, popularly known as Foxconn, will accelerate the expansion of iPhone production capacity in India – a decision prompted by the COVID-19 lockdown of the company’s Zhengzhou iPhone plant, TFI Securities analyst Ming-Chi Kuo said, citing his survey results.

The analyst expects Foxconn’s iPhone production in India to grow by at least 150% year-over-year in 2023. About 40-45% of iPhones assembled by Foxconn will likely come from India in the medium- to long-term, up from 2-4% currently, he added.

“Foxconn’s iPhone production capacity in India will increase rapidly in the next few years,” the Taiwan-based analyst said.

See also: Apple Lures China iPhone Customers With Deep Discounts But Sales Stutter Amid Domestic Weakness: Report

Why It’s Important: As China risks abound, Apple has been consciously making attempts to diversify its production base. The company is enlisting the support of Pegatron as the second manufacturer of iPhones in India, according to a Bloomberg report. About 25% of Apple’s iPhone production will be moved to India by 2025, the report added.

Data provided by Loup Funds, the venture capital company co-founded by Gene Munster, show that Apple’s China production exposure reduced from 60-62% in 2020 to 52-55% in 2021.

Apple closed Friday’s session 0.19% lower at $138.38, according to Benzinga Pro data.

Read Next: How to Buy Apple (AAPL) Stock

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