Apple started building some of its gadgets in India and Vietnam a few years ago, gradually weaning itself off of China. According to JP Morgan analysts, the Cupertino-giant is now preparing to make the two countries significant global production hubs. In a note sent to clients on Wednesday, JP Morgan analysts said that Apple will move 5% of iPhone 14 production to India by the end of 2022 and increase its manufacturing capacity in the country to make 25% of all iPhones by 2025.

According to the report, Vietnam will contribute 20% of all iPad and Apple Watch production, 5% of MacBook output, and 65% of AirPods by 2025. In recent years, India has drawn investments from Foxconn and Wistron by giving lucrative subsidies as New Delhi strives to make the country a manufacturing hub. The presence of global manufacturing behemoths, along with “ample labor resources and competitive labor rates,” makes India a tempting site, according to analysts.

Samsung, Apple’s main competitor, recognizes India as a critical global manufacturing base and has established one of its largest facilities in the country. All of its competitors, including Xiaomi, which presently dominates the market, as well as its competitors Oppo, Vivo, and OnePlus, locally assemble a proportion of their devices in the nation.

According to The Information, Google also intends to shift some Pixel smartphone manufacturing to India. The company, which avoided releasing flagship models in India for two generations, announced Wednesday that the next Pixel 7 models would be available in the country.

Despite having a modest market share in India, Apple has increased its investment in the country over the last five years. It launched its online Apple Store in the country two years ago and has openly stated that it is seeking to open the country’s first physical store. Experts say that Foxconn employs more than 20,000 people in India to put together iPhones, compared to 350,000 people in China.

“Historically, India’s iPhone supply chain has only supplied outdated models. Interestingly, Apple has requested that EMS vendors produce iPhone 14 and 14 Plus models in India in 4Q22, two to three months after production begins in Mainland China. The significantly shorter period means that India’s production is becoming increasingly important and that future iPhone allocations to India’s manufacturing would most likely be bigger. ” According to the research,

Due to the more sophisticated camera module alignment of the iPhone Pro series (done by EMS vendors) and stronger local market demand for the iPhone 14 series, we believe Apple now solely makes iPhone 14 and 14 Plus models in India (tax savings). We anticipate that volume will begin slowly in 4Q22 (1 million units per month, or 5% of overall iPhone volume). According to analysts, China and Taiwan will continue to gain market share in the “near term” due to lower cost structures.

“Taiwanese EMS vendors, particularly Pegatron and Wistron, are becoming more selective and focused on profitability while expanding into new markets like EVs and servers. Hon Hai is Apple’s principal EMS partner and should benefit from the relocation to India. “According to the article, Local suppliers should gain production share in Mainland China, while Taiwanese EMS will have an advantage in India. In Vietnam, we expect Taiwanese and Mainland Chinese EMS to divide the market.

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