News & Analysis

Apple: Adios China! Hello India!!

Reports coming from multiple sources suggest that Apple could be moving beyond its own "Beyond China" narrative by reducing its activities there

Over the past few months, reports of Apple cozying up to India as a manufacturing base were doing the rounds, especially after the company emerged as the best among equals in utilizing the government’s PLI scheme. In the recent past, we had reported about how Apple broadening its India story by growing jobs and luring Chinese suppliers into its India ecosystem. 

Amidst all of this, there were reports of the company’s largest contract manufacturer Foxconn planning business expansion in India with its CEO Young Liu inaugurating the country’s largest hardware prototyping center in Hyderabad. Now, the Wall Street Journal is reporting that Apple could well be reducing its China-focus even more in the next few years. 

Foxconn’s China revenues will reduce 

Young Liu told analysts during an earnings call that currently about 70% of Foxconn’s revenues came from China. Going forward, the proportion from markets outside of China will continue to grow. The company intends to triple the staff to 100,000 by 2024 and increase the annual output of iPhones from India to 20 million, compared to six million now. 

And the reasons aren’t far for one to see. Liu said labor-intensive industries transfer to low GDP countries as a routine and these economics grow with the development of such industries, which in turn triggers another round of transfers. He was referring to the past migration of production from the US to Japan, then to Taiwan and to mainland China. 

The company, formally known as Hon Hai Precision Industry Co., has also been investing big time to expand its automotive and semiconductor business. In fact, Foxconn also made a stock exchange filing that its subsidiary had received close to $780 million from Chinese firm Yantai Haixiu IC Industry Investment Center for selling its stake in chipmaker Tsinghua Unigroup. 

As for its India plans, Foxconn plans to expand its current facilities in Tamil Nadu and set up a new one in neighboring Karnataka where Apple plans to manufacture not just its iPhones but also other devices including AirPods, iPads etc. It is also seeking to set up a facility in Hyderabad for silicon carbide manufacturing and packaging plant for semiconductors. 

By the look of things, India is clearly becoming a good choice for Apple to speed up its supply chain, which took a major beating during the post-pandemic timeframe in China. 

Meanwhile, Apple plans big foray into movies 

Meanwhile, in other news from Apple, it looks like the tech giant could be getting into the movies business with a bang. A Bloomberg report said Apple plans to partner with studios to put more titles into the theaters with a plan that could cost them $1 billion a year. In the past, Apple originals received small theatrical runs or were exclusive to Apple TV Plus. 

The report said some possible releases could include Martin Scorsese’s “Killers of the Flower Moon,” starring Leonardo DiCaprio; Ridley Scott’s “Napoleon” and the spy thriller “Argylle.” A report in 9to5Mac however says the Scorsese movie is a separate story as Apple paid about $200 million on the production rights to Paramount a couple of years back. 

Whatever be the case, if Apple were to move forward on this front, it could put the new entrant in the streaming media space in closer competition with existing ones such as Amazon Prime, Netflix, Disney Plus HotStar etc. Readers may recall that Amazon had acquired Metro-Goldwyn-Mayer in 2022 and also plans to invest in the movie business in 2023. 

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