(MENAFN- Asia Times)
Comments on Twitter by technology analyst Ming-Chi Koo highlight India's emergence as the next big workshop of the world.
The well-known Apple watcher wrote:
Koo works for TF International Securities in Hong Kong. Let's put his remarks in context.
Apple's iPhones were first assembled in India in 2017. After a slow start, reports from market researchers indicate that output nearly tripled in 2021 and increased by about 50% year-on-year in the first quarter of 2022 to almost one million units.
That is impressive, but Apple sold 56 million iPhones worldwide during the quarter. For the time being, the units assembled in India are those intended to be sold in India.
But that leaves plenty of room for growth. In the first quarter, a total of 38 million cell phones were sold in India, giving Apple a unit-based market share of about 3% or nearly twice as many as were sold in China, where Apple had 18% of the market.
The Indian government is on Apple's side. Electronics are key to“Make in India,” the comprehensive program of industrialization announced by Prime Minister Narendra Modi in 2014.
Prime Minister Narendra Modi's 'Make in India' program, announced in 2014, is acquiring some substance. Photo: Indian Prime Minister's Office
The first company to make iPhones in India was Wistron, but newer models have been entrusted to Foxconn (Hon Hai Precision Industry Co Ltd) and, since April of this year, Pegatron, a Taiwanese electronics manufacturing company that mainly develops computing, communications and consumer electronics for branded vendors.
Wistron's factory was temporarily closed last December when unpaid workers went on a rampage, causing millions of dollars worth of damage.
Foxconn, Pegatron and Wistron – all headquartered in Taiwan – have long served as Apple's primary contract manufacturers. Foxconn and Pegatron assemble most iPhones: about 60% and 30%, respectively, according to market research estimates. But it looks like they will soon have more competition.
China's Luxshare Precision Industry is reportedly building a large new factory in Kunshan that should more than double its annual iPhone assembly capacity to as much as 15 million units, or about 7.5% of total iPhone production.
Luxshare Precision, a maker of cables and connectors for consumer, auto, computing and other applications, bought its existing iPhone assembly facilities from Wistron in 2020. In 2021, it won orders for the iPhone 13 Pro.
Luxshare is headquartered in Dongguan, Guangdong, China. Kunshan is situated between Shanghai and Suzhou. Its ambitions will probably not end with the Kunshan factory.
The Taiwanese may be more than a little annoyed. In mid-July, New Taipei City prosecutors accused Luxshare Precision of stealing IP and poaching talent from a Taiwanese company in order to win more orders from Apple.
No longer hand in hand? Photo: Pandaily
At this point, it cannot be said that iPhone assembly is moving from China to India. Rather, India is emerging as a potentially very large market that will probably be served primarily, if not entirely, by local assembly operations. At the same time, China is taking assembly business away from Taiwan.
And don't forget that, for the most part, assembled in India does not mean manufactured in India. As Asia Times reported in“Apple's still not backing down to China hawks in US ,” the most recent Apple Supplier List shows 51 of the company's top 200 suppliers based in China, 48 in Taiwan, 34 in Japan and 32 in the US. Of the remainder, only nine are in India.
Politics has made dependence on China a hassle for Taiwanese contract manufacturers and their customers. On August 5, it was reported that shipments from Taiwan to Pegatron's factories in China were receiving extra attention from Chinese customs officials after the company's vice-chairman met with Nancy Pelosi, speaker of the US House of Representatives.
Earlier in the year, China's“zero-Covid” policy forced Pegatron to suspend operations in Shanghai and Kunshan. Foxconn was also affected.
Pegatron is now focusing its expansion on Indonesia, Vietnam, Mexico and India. It also has operations in Australia, the Czech Republic, Japan, South Korea, Singapore and the US.
Foxconn, the world's largest electronics contract manufacturer, does most of its work in China, but its expansion plans are now focused on Vietnam and India. It also has operations in Malaysia, Hungary, Slovakia, Czech Republic, Brazil, Mexico and the US.
Of all these markets, India has the most untapped growth potential.
In 2015, after a visit to India by its founder and CEO Terry Gou, Foxconn announced that“We have significant plans for India and we see huge potential in the country. This includes plans to establish 10 to 12 manufacturing facilities in the country by 2020, which would generate around 1 million job opportunities.”
It hasn't happened yet, but it could happen over the coming decade.
Follow this writer on Twitter: @ScottFo83517667
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