Apple is hitting stumbling blocks in its effort to increase production in India, as the company faces pressure to cut its potentially crippling over reliance on China.
Patrick McGee and John Reed for Financial Times:
[Apple] has been sending product designers and engineers from California and China to factories in southern India, to train locals and help establish production, according to four people familiar with the operations.
It comes as Apple attempts to unwind its dependence on a China-centred supply chain strategy, following months of Covid-19 disruption that led to it reporting its first decline in quarterly revenues in three and a half years earlier this month.
Apple is building up nascent operations in India in an overdue diversification strategy…
At a casings factory in Hosur run by Indian conglomerate Tata, one of Apple’s suppliers, just about one out of every two components coming off the production line is in good enough shape to eventually be sent to Foxconn, Apple’s assembly partner for building iPhones, according to a person familiar with the matter.
This 50 per cent “yield” fares badly compared with Apple’s goal for zero defects. Two people that have worked in Apple’s offshore operations said the factory is on a plan towards improving proficiency but the road ahead is long.
MacDailyNews Take: Late is better than never.
It’s smart for both Apple and Foxconn to diversify assembly outside of China. There’s no sense having all of your eggs in one basket. — MacDailyNews, April 2, 2019
Apple cannot divest their dependence on China quickly enough (because they started years too late). – MacDailyNews. August 17, 2022
Diversify, diversify, diversify – especially away from CCP-controlled China. – MacDailyNews, October 19, 2022
Former U.S. President Richard Nixon, who opened relations with China in the early 1970’s, just before his death in 1994 remarked on China: We may have created a Frankenstein.
Please help support MacDailyNews. Click or tap here to support our independent tech blog. Thank you!
Shop The Apple Store at Amazon.
Why is apple not diversifying at least SOME production to US. They tolerate crap production rates and invest huge training, why not here. Also why not some in Germany. Some in Brazil. This failure to truly diversify falls flatly at cooks loser and failure at business 101 feet.
I don’t want to pay 20% more on everything Apple.
Only 20%?
LOL … cooks failure at business 101.
Forget about Brazil; it is now in the grip of a Socialist up-and-coming dictator who will ruin the progress achieved over recent years.
Yeah, Lula de Silva Scumma is a bad dude. Adios Brazil.
Americans’ work ethic can’t compete (with Asia). Get off work at 5:00pm… start packing up at 4:30pm. Ever try to run a business in the US? Not exactly the most friendly business environment. Apple needs fast, cheap, high quality. Raise your hand if you can find 100,000 Americans who can make the cut at an Apple product assembly “city” (factory)? Ain’t gonna happen in our lifetimes
This is BS. Honda in Ohio outproduces in Japan. The macPro made in the US had less defect issues than the ones made in china.
And I’m not saying bring ALL production back. SOME. 5%. If you do not get diversification, youre not equipped to have a conversation about diversification. The point is you will pay more and less in some regions, but you are diversified. So if China puts a gun to your head, you do not have to bend over.
US has lost the needed vigor. All that’s needed to confirm its future is to look at the education system. From the K-1 start, all the way to the once best Universities in the World (Harvard Med now has global warming as part of its training), focus has been diverted (race, gender, class, state-ism). Per business, woke = broke. The same is true for Edu…just a different kind of broke.
Brent, you are right; but surely there’s a sufficient % of Americans that don’t follow the woke herd and are smart and appreciative of the opportunity to work hard for a good company and succeed. The task-at-hand would be to locate them and bring them into the work force. Chick-fil-a; In-And-Out and others have delightful employees who provide good service and are grateful for their employment.
American manufacturing used to feature these attributes but not anymore. Apple isn’t interested in hard-working Americans who want to succeed. The want obedient robots who never complain, work long hours and receive minimal pay. I remember a shareholder meeting a few years ago when Tim Cook referred to bringing manufacturing back to “this country”, he couldn’t choke out “America”, the “US” or “our country”. There’ll be symbolic manufacturing here but the majority will sooner go to Vietnam and other Asian countries with labor costs a fraction of what it is here. It’s not all Apple’s fault of course, labor unions and federal and state regulations have made much of America an unattractive place for business, especially the very-capital-intensive kind.
Labor unions and federal regulations were in place during WWII, when our factory output essentially won the war. Our ability to make things only ended when companies and senior executives realized they could make more profit for themselves and their shareholders by offloading the dirty work of manufacturing to China and other low-wage countries, and enormous container ships brought international shipping costs way way down.
Apple certainly could make their products here — the biggest factories here have employed upwards of 100,000 people at a time (in multiple shifts). That’s nothing compared to Foxconn’s reported 1,000,000-person workforce in China’s “IPhone City”, but it’s a start. But Apple’s stock and profit margins would likely take a modest hit. As an Apple shareholder, I’d be willing to take that hit — would everyone? Doubt it.
There’s no comparison to WWII-era unions and regulations and the present day, it was the Wild West by modern standards. The OSHA inspectors would soil themselves and try to shut down our war industry if they went back in time. Company execs lobbied the government and got their way, we could blame Kissinger and Nixon for opening up to China, but most politicians went along with it then and ever since, both parties.
I sure wish we had kept our manufacturing base and not invited the entire planet through mass immigration. We might still have a normal society with high wages, accessible home ownership, single-earners being enough to raise a family and more or less settled black-white relations instead of the ethnic free-for-all we live in now.
Relatively inexpensive iPhones and millions of other cheap goods over the past ~30 years wasn’t worth it. Then again, the American people were never asked their opinion or had the chance to vote on it.
how is a caste society like India any better? You still have starving children doing the work. Until Apple commits to making things in country, with people who are paid fairly (and they can afford it), who cares? Ideology is one thing, taking action is another. Apple fails at both. Build stuff here. People could use the income. Sorry you’d have to follow the rules in that implementation, Apple. Tough to respect this.
Moving from China to India isn’t ‘diversifying’. That is swapping cheese for another country’s cheese. Sorry, Apple. You exist in a country with people hungry for work. Heaven forbid you pay them fairly and provide actual benefits and make stuff where you are based. :/
It doesn’t seem likely that any first world nation can provide a massive workforce for Apple, working at pay rates which would allow apple to sell for the prices it currently does.
This is only likely to change once Apple is able to use robotic technology to assemble all the components and also for final assembly of the products.
Once that becomes possible, Apple can site factories wherever it wishes. It would make a lot of sense to diversify production. China is unpredictable. Taiwan is under threat from China and India is uncomfortably influenced by Russia. Apple could usefully have factories elsewhere too.
alan: you are spot-on regarding this topic!
AC has all his eggs in a basket he distrusts with a passion. Never came across a dumber person, to be drank. Maybe he thinks he’s keeping his friends closer and his enemies closer, but is a pale stale male really that smart?