In a strategic move, Apple is actively seeking alternative suppliers from India, Japan, and South Korea to provide crucial components for its devices. Delays in government approvals for imports from existing Chinese suppliers have prompted Apple to diversify its supply chain.

Background:

• In January, 17 Chinese companies applied for government clearances to set up manufacturing facilities in India to supply components for Apple's flagship iPhones and iPads.
• Of the 17, 14 were granted initial approval, but the applications of four companies have been indefinitely delayed, and six have indicated a lack of interest in manufacturing in India.

Challenges Faced:

• National security concerns due to the Chinese origin of most companies have contributed to careful consideration of approvals.
• Environmental clearances, a state subject, are subject to expert committee evaluations.

Impact on Chinese Suppliers:

• Some Chinese companies, including Luxshare-ICT, have relocated manufacturing units to Vietnam due to delays in approvals.
• Ongoing India-China border tensions are seen as a factor hindering immediate government approvals for Chinese suppliers.

Apple's Response:

• With delays in imports from Chinese suppliers, Apple is now exploring new suppliers in India, Taiwan, Japan, and South Korea to establish "just-in-time" supply chains for expedited local production.

Industry Perspective:

• Industry experts suggest that smaller Chinese suppliers may be hesitant to invest in a potentially hostile country, given geopolitical tensions.
• Apple's increased push for manufacturing in India aligns with its strategy of diversifying its supply chain away from China.

Potential New Suppliers:

• Japan-based TDK is set to manufacture lithium-ion battery cells at a new plant in Haryana, India.
• Apple is engaging in exploratory talks with companies in India, Taiwan, Japan, and South Korea for critical components such as batteries, chargers, casing units, and cables.

Apple's Overall Strategy:

• Apple's strategy involves setting up assembling units initially and then bringing in specialized component suppliers.
• The company collaborates with major electronics manufacturing services (EMS) players in India, such as Foxconn, Pegatron, and Wistron (now under Tata Electronics).

Challenges Ahead:

• Replacing Chinese suppliers for certain technical components, such as camera lenses, may pose difficulties, as they require high-precision engineering.
• Apple may categorize components based on ease of migration or replacement with Indian suppliers, with some components considered more challenging to replace than others.

Note: Emails sent to Apple and the mentioned suppliers did not receive a response at the time of reporting.

Courtesy by: The Economic Times