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Apple Moving Production to India Carries ‘Potential Geopolitical Risks’: Ming-Chi Kuo

Apple has been seeking to expand its production in India for some time. It is essentially aimed to reduce its dependency on China. But reputed market analyst and one of the most active commentators on Apple developments Ming-Chi Kuo has now said that the move to shift its manufacturing operations to India carries “potential geopolitical risks.” The TF International Securities analyst predicted that setting up facilities in Vietnam over India could reduce the risks and be a better option for the Cupertino company. Kuo also suggested that the ongoing issues in China might delay some products.

In a thread on Twitter, Kuo pointed out that setting up production in India could involve potential geopolitical risks for Apple’s contract manufacturers in China including Luxshare ICT and Goertek that can be reduced by establishing facilities in Vietnam.

The diplomatic spat between the Indian government and its Chinese counterpart is something that could restrict Apple from expanding its manufacturing in India.

Kuo also noted that Vietnam has a better production environment than most countries outside China.

China’s authoritarian Communist government and its clashes with the US are some of the potential reasons for Apple to look for an alternative. However, the consideration to move to a new country for manufacturing stepped up this year after Beijing’s move to refrain from opposing Russia’s invasion of Ukraine and ongoing lockdowns, as reported by The Wall Street Journal, citing people familiar with the development.

Quoting the report from the business daily, Kuo said that the AirPods Pro 2 would enter mass production in Vietnam in the second half of the year. It is considered to be a successful case of mass production of Apple’s major products outside China. He added that the AirPods Pro 2 would retain the Lightning connector port, rather than adopt the USB Type-C port that is rumoured to arrive on Apple products in 2023 to comply with the EU’s push for a universal charger standard.

Kuo, however, noted that it was very challenging to duplicate the successful experience of AirPods Pro 2 to other products or countries in the short term. The analyst also pointed out that Apple’s shift of the AirPods Pro production could be attributed to the relatively not complicated supply chain. This suggests that the development could not be seen as a move to shift out of China for products including the iPhone models that require very complex input supply chains.

Apple has been manufacturing some iPhone models in India since 2017 as a part of its strategy to limit its reliance on China and to fulfil the growing demand for non-flagship iPhones in the country. Last month, the iPhone 13 confirmed as the latest model to be manufactured in India.

However, to expand that production process, experts believe that Apple looks for a stronger domestic market for the iPhone and other Apple products as well as policy-side improvements that are more friendly for local production and exports.

In April, CyberMedia Research stated that Apple shipped a million locally-produced iPhone units in the first quarter. The market has the potential and size to grow that number. However, an army of Android phones exists in the market to limit the attraction of iPhone models for the masses.


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