Apple Analyst Ming Chi Kuo Foresees New Product Introduction Shift Outside of China
Apple is set to make a historic move as it plans to initiate the development of the iPhone 17 outside of China for the first time. According to renowned Apple analyst Ming Chi Kuo, contract manufacturers in India will lead the charge, commencing the New Product Introduction (NPI) process in the latter half of 2024.
The key players in Apple’s supply chain, including Foxconn (Hon Hai), Pegatron, and the recently onboarded Tata Group, are all poised to embark on the introductory procedures for the iPhone 17 by as early as 2024. This marks a significant milestone in Apple’s journey to diversify its supply chain and reduce its reliance on China.
A Shift Away from China
Apple’s endeavors to diversify its supply chain are further exemplified by its plans to decrease its operations with Foxconn in Zhengzhou and Taiyuan, China, by a considerable margin. Kuo, a Taiwan-based securities analyst, revealed that Apple intends to scale down its operations with Foxconn in Zhengzhou by 35-45% and in Taiyuan by 75-85% by 2024.
Kuo noted that Luxshare’s rapid increase in iPhone order allocation and enhancements in production line automation are the primary driving factors behind this reduction in production scale.
The choice of the standard iPhone model for production in India is based on its lower design complexity, which helps mitigate design-related risks.
Increasing iPhone Production in India
Kuo projected that, if all goes as planned, the proportion of iPhones manufactured in India will see a substantial increase, reaching 20-25% by 2024.
Currently, in 2023, 12-14% of global iPhone shipments are produced in India, with Foxconn holding a dominant 75-80% of the production capacity in the country, as highlighted in Kuo’s research note.
Tata Electronics Enters the Picture
Apple has been actively boosting its production capacity in India, and a pivotal move was the inclusion of Tata Electronics as an assembler. Tata Group acquired the Wistron production lines for $135 million and commenced production on October 27. This marks a significant milestone as it integrates the first Indian company into Apple’s illustrious supply chain.
Kuo emphasized the strategic importance of involving Tata in the assembly process, indicating that it solidifies Apple’s relationship with the Indian government. This development is expected to yield significant benefits for the future sales of iPhones and other Apple products in India, a critical component of Apple’s growth strategy over the next decade.
Apple’s decision to diversify its supply chain and shift the NPI process for the iPhone 17 to India signifies a significant step toward reducing its dependence on Chinese manufacturing. With these strategic moves, Apple aims to secure its future and expand its presence in the ever-growing Indian market.
