America’s New Ally Takes Chunks out of China’s Economic Cake

Apple’s iPhone manufacturing in India is on the rise, as China’s share sharply declined at certain factories in the mainland.

“Apple has been a major beneficiary of the PLI scheme, with its outbound mobile device shipments expected to have surpassed $14.39 billion in FY24, a 33 percent increase from the previous year,” newspaper Times of India wrote on May 24 about Apple’s growing manufacturing push.

In April 2021, the Indian government launched the production-linked incentive (PLI) scheme to attract companies that want to manufacture smartphones in the country.

India’s steady rise in Apple’s iPhone supply chain has come as some production facilities in China report a marked decline.

Apple has been shifting production from China due to Beijing’s strict pandemic policies, rising labor costs, and tensions with the U.S. over Taiwan and industrial policies. India and other nations offer cheaper labor and policy incentives.

Though China remains the leading hub for manufacturing Apple’s flagship product, the iPhone, India’s rapidly growing share is set to bring down the company’s dependence on China.

“The U.S. tech giant now makes as much as 14 percent or about 1 in 7 of its marquee devices from India, people familiar with the matter said,” Bloomberg reported on April 10.

According to Bloomberg, in fiscal year 2023-24, Apple assembled $14 billion worth of iPhones in India, double the previous year.

Between the fiscal year 2023 and 2024, Apple iPhone exports from India almost doubled as the Indian government’s PLI scheme has lured the company to expand its manufacturing in the country, Indian newswire service Press Trust of India wrote on April 16.

Newsweek contacted China’s Ministry of Commerce, Apple, India’s Ministry of Electronics and Information Technology, and Foxconn for comment in a request sent via email.

As Apple doubles down on India, recent data suggests that China’s share in iPhone production is on the decline.

“According to data released by Zhengzhou’s local customs authority, Henan’s smartphone exports totaled 6.65 million units in the first quarter, down 60.1 percent from the same period last year,” Hong Kong newspaper South China Morning Post (SCMP) wrote on April 26.

The declines reflect efforts by Apple suppliers like Foxconn to expand manufacturing beyond China to places such as Vietnam and India, now the world’s number two smartphone market.

Foxconn’s Zhengzhou manufacturing plant is the top location for producing iPhones on behalf of Apple.

Smartphone exports from China’s central Henan province, home to the world’s largest iPhone factory, plunged 60 percent in the first quarter. This underscored Apple’s push to diversify production outside the country.

Last year, Henan’s smartphone exports fell 14.5 percent to 57.6 million units as assembly resumed after COVID-19 disruptions eased.

Foxconn, Apple’s main iPhone maker, ramped up diversification after struggling to meet targets late last year when workers fled its Zhengzhou factories over COVID fears and protested over pay.

After that chaos, a top Henan official lobbied Foxconn’s CEO to keep operations and investment in the province, where the Taiwanese company is the largest importer and exporter.

Meanwhile, Apple CEO Time Cook has previously expressed enthusiasm for increasing his company’s footprint in India.

“There are a lot of people coming into the middle class, and I really feel that India is at a tipping point, and it’s great to be there,” Tim Cook said during his visit to India in May 2023.

Apple is now planning to start manufacturing up to 50 million iPhones in India each year in the next two to three years in a push to reduce dependence on China.