Apple is moving more substantially than ever to diversify its manufacturing and supply chain away from China, according to an extensive report by Bloomberg‘s Mark Gurman.

Apple’s efforts began a decade ago, albeit on a much smaller scale than it is today. In 2012, Apple and its partner Foxconn set up iPhone manufacturing in Brazil to avoid heavy import tariffs. A year later, Apple started assembly of its 2013 Mac Pro in the US. The report highlights that neither efforts went as steadily as hoped, as Apple has now scaled back its efforts to “token assembly” in the US.

Escalated trade disputes between the US and China during the Trump administration accelerated Apple’s supply diversification efforts, says Gurman. The subsequent COVID-19 pandemic further made the efforts a top priority within Apple’s ranks. The company was still reeling from the pandemic-induced lockdowns as soon as late 2022, when supplies of the iPhone 14 Pro and 14 Pro Max were severely constrained around the world.

The report ascertains that Apple is setting up a hub of countries, mainly centered around Southeast Asia, to pick up a growing share of manufacturing in place of China. The countries in question include Malaysia, Vietnam, India, and even Ireland.

Apple’s efforts center on India as a location for production of iPhones and accessories, Vietnam for AirPods and Mac assembly, Malaysia for some Mac production, and Ireland—where suppliers currently build the relatively easy-to-produce iMacs—for a range of simpler products. Managers in Apple’s operations department have instructed employees to focus on sourcing additional components and locating production lines outside China for more new products coming in 2024.

Bloomberg

According to the report, Apple now has a number of “tiger teams” within its operations division. The teams, consisting of hundreds of employees, handles shortcomings within the supply chain. The teams also “assess facility maintenance schedules, and assemble more extensive lists of backup suppliers for every component”. Part of these efforts is to better predict and handle possible component shortages, adds the report.

The report highlights Apple’s desire to rely less on Taiwan amid geopolitical tensions surrounding the island. The company strongly relies on TSMC to produce chips powering almost all of Apple’s products, and moving chip production would be a more delicate endeavor as no other companies can make chips at the quality and scale that Apple seeks. TSMC plans to start making chips in its Arizona plant next year, although production scale won’t meet Apple’s demands anytime soon.

The report warns that Apple is treading carefully with its plans as it fears possible retaliation from the Chinese government if it “transitions too rapidly”. Facilities set up outside China are struggling to meet Apple’s quality control and as such production yield is yet to adequately ramp up, stresses the report.

India is pegged to be the upcoming center for Apple’s assembly efforts. Apple’s main Taiwanese partners – namely Foxconn, Pegatron, and Wistron – have recently set up facilities in the country. The report also adds that Tata, an Indian native manufacturer, now makes iPhone chassis, with plans to assemble the entire product in the future.

Apple hopes to make 10 million iPhone units in India by the end of this year and more than 15 million in in 2024. The report claims that the country is on track to make as much as 25% of global iPhone supply by 2025, but warns that plans to build iPad and Apple Watch devices are unlikely to materialize soon.

Apple plans to start simultaneous production of its upcoming iPhone 15 lineup in both countries, adds the report, as two senior Apple manufacturing executives are now in regular visits to India. The report warns that iPhone 15 Pro and 15 Pro Max are expected to be initially made in China only owing to their premium titanium chassis, whereas production for the base iPhone 15 casings is already underway by the local Indian supplier Jabil.

Apple clearly sees India as its next growth opportunity in the manufacturing and sales domain. The company is setting its foot in the country on different fronts. Foxconn and Pegatron are investing heavily in India to set up new manufacturing facilities. The first Apple Store location in India is set to open later this month in Mumbai as the company assigns India as its own sales region.