Apple reports 18% of iPhone manufacturing now occurs outside China, with Vietnam and India emerging as key hubs amid U.S.-China trade tensions and incentive-driven expansions.
Apple’s strategic supply chain shift reaches milestone with 18% of iPhone production now outside China, leveraging Vietnam’s electronics boom and India’s manufacturing incentives.
Decentralization Strategy Takes Shape
Apple confirmed during its 25 April 2024 earnings call that 18% of iPhone manufacturing now occurs outside China, a significant increase from 7% in 2021. CEO Tim Cook highlighted Vietnam’s growing role in AirPods and MacBook component production, while India’s Tata Group began making iPhone 15 enclosures in Tamil Nadu this month through New Delhi’s $1.3B Production-Linked Incentive (PLI) scheme announced 15 May 2024.
Vietnam Emerges as Electronics Powerhouse
Vietnam Customs data shows April 2024 electronics exports surged 22% year-over-year to $12.4B, driven by Apple suppliers. Foxconn secured $500M on 13 May for a new Vietnam plant targeting late 2025 production of Apple peripherals, according to Nikkei Asia. Concurrently, Luxshare Precision disclosed plans in a 16 May SEC filing for a $330M Mexican facility to serve North American markets.
Strategic Implications and Challenges
Analysts note this ‘China +1’ strategy responds to lingering U.S.-China trade tensions while addressing pandemic-era supply disruptions. However, infrastructure gaps in India contrast with Vietnam’s skilled labor pool. Chinese manufacturers like GoerTek now face revenue risks as Apple reallocates orders.
Historical Context: Supply Chain Evolution
Apple’s current pivot mirrors earlier diversification efforts. In 2017, the company began testing AirPod production in Vietnam following rising Chinese labor costs. The 2020 COVID lockdowns accelerated plans, with India’s PLI scheme launched that same year attracting Foxconn and Wistron. By 2022, 5% of iPhones came from India.
Comparative Regional Development
Vietnam’s electronics transformation follows a path similar to South Korea’s 1990s semiconductor boom, where government incentives attracted Samsung and Intel. However, unlike Korea’s vertically integrated chaebols, Vietnam relies on foreign tech transfers – a model that risks middle-income traps without domestic R&D investment.
