Apple’s experience in China shows that companies with high fixed costs and a lot of capital stock may be able to break away from their suppliers quickly, while companies whose products require a lot of labor may find it harder to do so. As Apple moves away from China, this is the future it will face. But this might not be as easy as Apple hopes. There are a lot of reasons for this:
Foxconn, which is based in Taiwan, is a world leader among Apple’s main suppliers. It controls about 70% of Apple’s supply chain. The Apple supplier Data up to 2021, however, doesn’t show any places that stand out as big winners to make up for China’s decline. Those numbers tell the whole story “U.S. growth was the highest, jumping from 7.2 percent in 2019 to 10.7 percent in 2021. The second-highest increase occurred in Taiwan, at 9.5% (from 6.7%). The market share of India went from less than 1% to 1.5%, while that of Vietnam grew from 2.2% to 3.7%.”
Even though India is a developing economy with a promising future, it will take some time before it can meet Apple’s global demand in a big way. It will take some time before output can be scaled up in plants that have to be established in such areas. The fact that Apple was unable to successfully manufacture a trashcan MacPro in Texas in a trial that took place in 2013 demonstrates how difficult it is for the company to rapidly change its production base.
The drive to scale manufacturing in these emerging societies will be noted because of the acceleration of this process by geopolitical and global instability for Apple. Apple’s decoupling preparations have been accelerated in the wake of the recent zero-covid policy by the Communist regime and the violence and protests in iPhone city.
While emerging markets like India and Vietnam show promise, Apple will have a hard time quickly expanding production there. But doing this right now is the best thing for Apple to do if it wants to keep its market share and position as the world’s leader in tech.
