According to recent reports, the Chinese government is intentionally hindering Apple’s goal to increase iPhone production in India from around 15% of global output to 25% by 2027.
Reports suggest that China is using a combination of three tactics to complicate the transition of Apple’s manufacturing partners to India…
iPhone Production in India
For several years, Apple has aimed to reduce its reliance on China for manufacturing, with the pandemic heightening concerns over the risk of concentrating so much iPhone production within a single country.
India has become Apple’s secondary manufacturing hub, gradually scaling production from the iPhone SE to the latest flagship models. It has been extensively reported that Apple aims to produce 25% of its iPhones in India by 2027.
The Indian government has been fostering this increase through various tax incentives on imported components.
China Deliberately Hindering This Transition
Two articles in the Financial Times indicate that the Chinese government seems to be taking steps to obstruct this relocation of production.
The first issue noted is that the Chinese government is making it difficult for engineers to travel to India.
Beijing is tightening its control over advanced Chinese technology, seeking to keep essential knowledge within its borders amid escalating trade tensions with the US and Europe. Recently, Chinese authorities have made it harder for certain engineers […] to exit the country […]
Among those affected is Foxconn, Apple’s primary manufacturing partner, which has been at the forefront of the Silicon Valley brand’s supply chain diversification in India.
Secondly, export controls are being enacted to obstruct or delay the shipment of critical equipment and components.
Chinese authorities have suggested new export restrictions aimed at retaining crucial battery technologies and limited access to technologies for processing essential minerals, according to various industry sources and ministry announcements […] An Indian official also claimed that China has been using customs delays to hinder the flow of components and equipment moving south.
Lastly, it’s reported that Chinese component manufacturers are being advised against setting up production facilities in India, preventing Apple from bypassing export restrictions by producing components locally.
The ongoing trade tensions initiated by the Trump administration have heightened these issues, prompting the Chinese government to adopt a tougher stance toward American companies.
Indian Government Not Assisting in Certain Areas
While the Indian government has shown interest in attracting foreign manufacturers to establish operations in the country, the FT reveals that political strife with China has led to the government blocking Chinese firms from constructing new facilities.
Apple supplier Luxshare is reportedly one of the companies denied permission.
DMN’s Perspective
China was unlikely to remain passive while Apple shifted a greater portion of its production abroad, making it predictable that the government would find ways to complicate matters for the tech giant.
However, the prevailing trade war suggests we can anticipate increasingly stringent actions from Chinese authorities against US enterprises, with Apple being a prime target. Unless Trump reconsiders his approach, which seems improbable, the situation is poised to become even more challenging.
Photo by Ximena Ibañez on Unsplash
