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Apple's supply chain rebalancing: Returning to chinese production

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According to official statements from Shenzhen, Apple chief operating officer Jeff Williams met on July 24 with Meng Fanli, the city's Communist Party secretary. Williams reportedly told Meng that Shenzhen is an important market for Apple, which intends to deepen its cooperation with the city.

Apple is currently ramping up production for its iPhone 16 series devices, which are expected to launch in the fall, as its contractors in China, including Foxconn Technology Group’s plant in Shenzhen, are recruiting workers. While Apple has joined rival firms like Samsung Electronics in building up production capacity in countries such as Vietnam and India, China has remained a key assembly location for the iPhone maker, as no other country yet has the same level of manufacturing sophistication and scale.

In recent years, Apple has tried to reduce risks by diversifying its supply chain. One key strategy has been moving some production orders to India. However, this shift faced many hurdles, especially with the assembly of the iPhone 15. These issues led Apple to move part of its production back to mainland China.

Last year, Indian factories had major issues during the assembly of the iPhone 15. Due to quality problems, many products were returned. This forced Apple to cut prices. The issue was so severe that Apple CEO Tim Cook visited China to adjust the supply chain.

In response to these setbacks, Apple adjusted its strategy this year. Part of its production moved back to mainland China. Industry giants like BYD and Luxshare Precision are now part of the iPhone 16 supply chain, becoming new partners for Apple.

Foxconn’s base in Sriperumbudur, India, started making the iPhone 15 series in August 2023. The goal was to shorten the shipping time difference between India and China and sync the supply chains of both places. The Indian factory closely followed its Chinese counterpart, supplying iPhone 15 series phones to the global market with only a few weeks’ difference.

Despite these efforts, Indian factories still face many problems. They rely heavily on parts from mainland China, which affects both quality and efficiency. Also, Indian factories have low iPhone yield rates (only about 50%) and hygiene issues, including high E. coli levels. These problems hurt product exports to Europe and mainland China, impacting sales.

Editor:Vicky

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