What you need to know
- A report suggests that Coronavirus disruption could extend beyond China to Apple's Indian manufacturing base.
- India is the world's second-biggest iPhone maker but remains largely dependant on China for parts.
- Both Foxconn and Wistron manufacture iPhones for Apple in India.
A report has suggested that disruption to Apple's supply chain caused by the coronavirus outbreak could extend beyond China to Apple's Indian manufacturing base, in part due to its reliance on China for parts.
A report from LiveMint says that smartphone makers are worried about the impact that the coronavirus outbreak could have on the supply of parts from China. According to the report:
The coronavirus outbreak in China could start to disrupt India's production of smartphones if it continues to spread in February, as it could delay component shipments, industry executives said. India is the world's biggest smartphone maker after China but is still largely dependent on China for supplies of parts such as cells, display panels, camera modules, and printed circuit boards. Taiwan's Foxconn and Wistron make iPhones in India for Apple, and Foxconn produces phones there for China's Xiaomi as well. Other smartphone makers in India include South Korea's Samsung and China's OnePlus.
According to industry executives, India has already negotiated planned disruption caused by the Lunar New Year holiday, during which China's factories close down. Inventories were ramped up in advance of that delay, however, any further disruption could have a big knock-on effect:
Those disruptions were already planned but if it (the virus' spread) gets prolonged then for March and April production we will have serious trouble," said S.N. Rai, the co-founder of homegrown smartphone maker Lava. "We're definitely worried about it."
Whilst components can be sourced from other eastern bases such as South Korea, Vietnam, and Taiwan, smartphone makers would reportedly only purchase from there as a "last resort" as it would force changes to designs and software.
The news highlights that even though Apple has managed to diversify its manufacturing operation somewhat through India, the operation as a whole remains reliant on Chinese manufacturing not only for assembly but also for parts, a fact that could prove troublesome if the coronavirus outbreak continues to spread. Apple's manufacturing partner Wistron only opened its latest iPhone factory last week.
Reports have already confirmed that the virus has created "massive uncertainties" in China, and Apple has been forced to close three stores in the country as a result as a result.
