Apple is set to reduce its dependence on production lines in China as a manufacturing hub for its iPhone, iPad and Mac product lines. It turns out that India and Vietnam are set to be the biggest gainers, as Apple not only looks to diversify production lines, but also ramp up production of the iPhone and the iPad. There have been persistent reports through last year that Apple was strengthening its bases in other countries to help with pushing the production numbers, particularly post the Coronavirus pandemic which shuttered factories and production lines in China for a significant part of the first half of last year. This comes at a time when Apple has reported the latest quarterly numbers and they are, well, record breaking. The company posted an all-time record revenue of $111.4 billion, and has seen significant gains in revenue across all product lines, including iPhone, Mac, iPad and wearables such as the Apple Watch and the AirPods audio product lines.
A report by Nikkei Asia says that Apple is going ahead with plans to focus on strengthening production outside of China, even though the new US government is expected to take measures to ease the US-China tensions. The report states that Apple is looking towards India to ramp up iPhone production, and is expected to start the production of Made in India Apple iPhone 12 series as early as this quarter. So far, Apple partners in India, including Foxconn and Wistron, manufacture previous generation iPhones, including the iPhone 11 series and the iPhone XR. That has helped Apple, which reported very strong India numbers for the festive quarter, which coincided with the launch of the Apple India online store as well.
We had reported earlier this week that Apple had doubled its market share in the Indian smartphone space, during the winter quarter. It turns out that the Apple iPhone 12, Apple iPhone 11 and the iPhone XR have been the most popular phones in India during the winter months, which means Apple has doubled its bite on the Indian smartphone market to 4%. Apple also clocked at 60% year on year growth in India while the festive quarter, which saw the Apple India online store go Live just ahead of the Dussehra and Diwali festivals, registered 100% year on year growth.
Through the summer of 2020 and heading into the festive season, the government of India rolled out the Production Linked Incentive (PLI) offer in phases to push for local manufacturing and make India a manufacturing as well as export hub. In June, the government rolled out a PLI offer extending incentives of around Rs 41,000 crore for meeting local manufacturing targets for tech companies and tech products. Apple and Apple’s manufacturing partners in India including Foxconn and Wistron announced their participation in the scheme. Apple has participated in the Make In India initiative as well, and the company started the production of the iPhone 11 series, the then latest iPhones, in India last year.
It is expected that the production of the Apple iPad will begin in Vietnam by the middle of 2021, and Apple also wants to increase production of Mac computing devices as well as the HomePod smart speakers in Southeast Asia. Foxconn has already invested $270 million to set up a subsidiary in Vietnam last year, to expand production capacity for Apple’s hardware lines. The report also says that Apple is building up the production capabilities for Mac Mini in Malaysia while a lot of the MacBook production is expected to shift to Vietnam. At this time, most Mac computers are made in China.
Apple can take this risk of shifting production focus out of China and spread that across multiple countries in Southeast Asia as well as India. Apple reported record breaking revenue for the Q1 2021. The company posted an all-time record revenue of $111.4 billion, which is a 21% increase compared with the same quarter last year. in the Q1 2021 results for the quarter which ended in December, Apple says that international sales accounted for as high as 64% of the quarter’s revenue. It was a strong showing for Apple’s entire product line too. The iPhone sales, where no doubt a lot of the interest was in the new iPhone 12 series, accounted for almost $66 billion in revenue, while the iPads clocked more than $8.4 billion and the Mac computing devices garnered more than $8.6 billion in revenue. All these numbers are significantly higher than previous year’s comparative quarter.