Apple is reportedly looking for alternative production bases, partly because of poor performance in export delivery from China. In layman’s terms, “export delivery” means a shortage of products reaching the United States, and an increase in price for the American consumer.
Apple’s struggle to meet high worldwide demand for its products resulted in a significant drop in revenue. Apple’s revenue was down a staggering 5% for the final three months of 2022. This poor performance can be partly linked to the restrictions imposed on Apple's manufacturing capacity in China during the country’s zero-COVID policy. These restrictions left many iPhone manufacturers locked down and unable to meet Apple’s pre-determined targets.
Apple is currently in talks with three manufacturers in Thailand about producing components and modules for Apple’s MacBook Pro’s in the country. Thailand already plays a major role in producing Apple Watches and seems like a natural choice for the electronics giant. One of Apple’s suppliers in Thailand has already started building manufacturing plants. They are completing the construction of a factory specifically designed to produce MacBooks by the end of 2023. Another supplier has stated that they have completed a trial production line for MacBooks in Thailand.
To reduce the chances of supply chain interruptions, Apple is also moving production of its MacBooks to Vietnam through its top supplier, Foxconn. Talks began in August 2022 to shift production of Apple Watches, MacBooks, and Home Pods through Foxconn. Foxconn could begin producing MacBooks in Vietnam as soon as May 2023. Foxconn also signed a memorandum of understanding in August 2022 with Vietnamese developer Kinh Bac City to invest $300 million to expand its plant in Bac Giang Province in northern Vietnam. This expansion was reportedly designed to boost production of Apple products and will generate 30,000 jobs in the area.
In 2021, Apple also began assembling its iPhone 14 in India. Apple has produced many of its older models in India, but this was the first time it produced the latest model in the country. The company is planning to manufacture 25% of its iPhones in India, as per Piyush Goyal, India’s Minister of Commerce and Industry.
Apple’s CEO Tim Cook was in India the week of April 17th, 2023, to open India’s first flagship Apple stores in Mumbai. He also met with Indian Prime Minister Narendra Modi and numerous cabinet ministers in New Delhi on April 19th, 2023, where he also opened a second store.
Cook tweeted, “Thank you Prime Minister Modi for the warm welcome. We share your vision of the positive impact technology can make on India’s future — from education and developers to manufacturing and the environment, we’re committed to growing and investing across the country."
Apple manufactured $7 billion worth of iPhones in India in 2021, tripling production in the country. Apple’s partners, Foxconn, and the Taiwanese manufacturing company, Pegatron Corp, now make 7% of Apple’s iPhones as the company continues its shift away from China.
Given recent tensions between the United States and China over multiple issues, it seems prudent for American manufacturing to look elsewhere for high-quality manufacturing. South and Southeast Asia seem to be Apple’s preferred destinations. Cook’s recent visit to India, and his photo-op with Prime Minister Modi, is a good indicator of Apple’s future ambitions in the region.
In a few years, it may become normal for Apple products to say, “Made in India” or “Made in Thailand,” rather than the usual “Made in China” that we have become accustomed to seeing!
Bobby Kincaid is a research intern in the Young Professionals program at the East-West Center in Washington. He is a recent graduate from American University with a major in international relations with a focus on China and Taiwan.