According to a report by the Financial Times, Apple is facing a significant challenge in reducing its dependence on China. In particular, a supplier based in India is producing iPhone casings with a 50% rejection rate, compared to the company’s target of zero defects. The report suggests that Indian suppliers lack the can-do attitude of Chinese suppliers. One former Apple engineer further stated that the Indian supply chain suffers from a lack of urgency, which sometimes leads to longer supply times.
The challenge of replicating Apple’s Chinese supply chain in India is a daunting task, as poor yields have become a significant issue for the company. At an iPhone casings factory run by Indian conglomerate Tata, only half of the components produced are of acceptable quality to be sent to Foxconn, Apple’s assembly partner for building iPhones.
While Indian companies are expected to adapt and learn the standards required from an Apple supplier, it is likely to be a lengthy process. Tech entrepreneur and academic Vivek Wadhwa suggested that it could take up to three years for Indian suppliers to be capable of the kind of volume production needed to compete with Chinese production.
Apple may also need to adapt to the bureaucratic government in India, as Wadhwa suggested that its engineers learn the art of “making do” or transcending obstacles. Nevertheless, the prospects of transitioning a substantial chunk of iPhone production to India remain good in the mid-term, with recent estimates suggesting that 25% of global production will take place in India by 2025, and 50% by 2028. With the launch of the Apple iPhone 15 later this year, the company will have to ramp up its production rate significantly over the next few months.
It is important to note that new Apple supply operations in other countries cannot match those that have been refined for decades in China. As a result, similar issues may arise with new Apple suppliers in other countries in the future. The report highlights the scale of the challenge that Apple faces in reducing its dependence on China, and the work that needs to be done to replicate its Chinese supply chain in other countries.
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