Yesterday the Financial Times reported on Apple's history of developing a sophisticated supply chain in China that would be close to impossible to replicate anywhere else in the world. In the big picture, that remains true to today, but India is now going all out to assist Apple in developing a new supply chain outside of China.
According to a new Bloomberg report, "More than a dozen of Apple Inc.’s Chinese suppliers are receiving initial clearance by the Indian government to expand in their country, assisting Apple's efforts in diversifying its assembly network beyond China.
AirPods and iPhone assembler Luxshare Precision Industry Co. and a unit of lens-maker Sunny Optical Technology Group Co. are among the companies gaining approval. The clearances from key Indian ministries are a step toward full approval for expansion in India, and the companies will still likely to be required to find local Indian joint venture partners, sources confirm.
Apple and other US electronics brands are seeking to reduce their reliance on China after trade restrictions and COVID-related production disruptions laid bare the risks of too much concentration in one country. The clearances signal that India is allowing more Chinese companies in to build out its tech manufacturing sector, even as political tensions between the Asian neighbors have intensified.
Prime Minister Narendra Modi has made it a national priority to grow India’s manufacturing sector, providing financial incentives and government support for companies’ expansion projects. Apple has played a central role in that effort, with partners such as Hon Hai Precision Industry Co. producing more iPhones in the country for the latest generation than ever before.
About 14 Apple suppliers are receiving green light from India, after the company named them as companies whose services it needs to increase its presence in India, sources say. While the vast majority of Apple products are still assembled in China, the company has in recent years started making more of them in India through Taiwanese partners.
Apple wields tight control over its supply chain that comprises hundreds of component makers. Some Indian companies, such as the Tata Group, already provide Apple with parts, and the country is pushing hard to add more local providers into the supply chain to boost and diversify its electronics industry. Joint ventures with Chinese component makers are a way of achieving that.
For more, read the full Bloomberg report.