There is a lot of crunching in relations between Beijing and Washington – and not just since the massive deployment of Chinese military forces over the long Easter weekend to practice “lockdown” of Taiwan. For US companies, the rising tensions mean that they have to close down their production sites and business relationships in and with China need to check.
Because these business relationships have long been the subject of talks between the US House of Representatives and representatives of large US corporations. In this sense, Mike Gallagher (39), Republican chairman of the House of Representatives’ special committee for the Chinese Communist Party, recently gave an unusual warning shot Tesla away. Tesla already has a gigafactory in Shanghai and now wants to build a new battery factory there. Gallagher classifies these plans as “very questionable”.
iPhone production in India tripled, Thailand under discussion
Apple in turn has been trying for some time to be more independent from China, is looking for new production sites or expanding existing ones outside of the huge empire. How Bloomberg TV
reports that the iPhone group sold smartphones worth around seven billion dollars (6.35 billion euros) last year India produced, which corresponds to a tripling of the previous year. Apple now has 7 percent of its iPhones manufactured in India, the report said.
At the same time, the business newspaper reports “nikkei”
on Thursday that Apple is interested in setting up a MacBook production facility in Thailand. The US group is already in talks with potential suppliers. Apple has had its Apple Watch manufactured in Thailand for more than a year.
Shifting production away from China isn’t easy for Apple and its suppliers. They have spent many years establishing production and supply chains there. But these turned out to be in the corona pandemic as vulnerable: Hard lockdowns on site had paralyzed the production of contract manufacturers such as Foxconn. Although production in the huge plants has long been up and running again, Foxconn is based in Taiwan. Apple also obtains a not inconsiderable proportion of the chips it needs from the manufacturer TSMC in Taiwan. The political tensions surrounding the small island republic had recently increased massively – one more reason for Apple to make itself more independent of China and companies in the sphere of influence of the giant empire.
Apple’s market share in India is growing
India plays an important role in the desired diversification. Apple will soon open a huge store in the metropolis of Mumbai, with which CEO Tim Cook (62) also wants to underline the growing importance of India for the group, like that “Wall Street Journal”
writes. Daniel Ives, analyst at Wedbush Securities, believes that now is the time for Apple to establish its own manufacturing operations in India, including retail, in order to further develop the attractive Indian market.
For several years, Apple struggled to gain a foothold in the Indian market and compete with the cheaper Chinese models. However, the company is rapidly gaining market share and could expand this to 5 percent in the current year – after 1 percent in 2019, as data analyst Counterpoint Research estimates. For comparison: In China, Apple’s market share in the final quarter of 2022 was around 22 percent. For this reason alone, the group will not be able and willing to set down its tents so quickly, which is reflected not least in the name of its “China+1 strategy”.
Nevertheless, Apple has expanded production in India at a fast pace over the past year and could produce the upcoming iPhone model series simultaneously in China and India for the first time this fall, reports Bloomberg. By 2025, a quarter of the iPhones manufactured worldwide could then come from India. India is doing its part to speed up development, advertising with many government incentives to bring smartphone production into the country. Contract manufacturers have created at least 50,000 jobs on the subcontinent since the summer of 2021, with tens of thousands more to follow, according to Bloomberg.
According to The Wall Street Journal, India is the second largest smartphone market in the world in terms of both sales and annual shipments. The penetration rate in India is only 50 percent – ​​so there is still a lot of room for improvement here. So it could only be a matter of time before India overtakes China in terms of importance for Apple, the Wall Street Journal speculates.