Scaling manufacturing power: Apple in China, key lessons for India

One company turned China into a manufacturing powerhouse. Now India must ride the diversification wave to do the same
Akash Prakash
Listen to This Article
I am in the middle of reading this fascinating book, Apple in China – The Capture of the World's Greatest Company. The book has been written by Patrick McGee, a Financial Times journalist based in San Francisco and responsible for covering Apple. The book tells two intersecting stories. First, how Apple moved from being just days away from bankruptcy in 1996 to becoming the most valuable company in the world within a span of 15 years. Second, it traces the contribution Apple has made to transforming China from a third-world, low-skill manufacturing base into the world's largest and most sophisticated

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Indian Express

6 hours ago

• Indian Express

From the Opinions Editor: India needs a well thought out trade strategy, but first it needs a China strategy

Dear Express Reader Over the past 11 years, the Narendra Modi government has taken several steps to shore up the economic momentum, and put the country on a higher growth trajectory. But, despite its efforts to ensure macroeconomic stability, revive private sector investments and boost household consumption, growth has been less than spectacular. Between 2014-15 and 2024-25, the economy grew at an average of just 6.2 per cent. Now, in its third term, whether pushed by Donald Trump's tariff war or the imperatives of growth, the government is making a determined effort to sew up trade agreements, hoping they will help embed the country into global supply chains, catalyse exports, and push up growth. A trade deal has been struck with the UK, and talks are proceeding with the US and the EU, with many of the issues that have previously held back these agreements being either resolved or sidestepped. These agreements will ensure greater market access and bring down tariffs, improving competitiveness of exports. But the question is: Will these trade deals be enough? Can they alone facilitate India's deep integration with global supply chains? Can the country emerge as a major production hub without integrating more closely with the supply chains that run through South and East Asia which form a vital part of global production systems? The case of Apple is instructive. The dramatic scaling up of the Apple ecosystem in the country — the company has recently said that iPhones sold in the US market will be mostly sourced from India — is a remarkable development. It is a consequence of both the government's production linked incentive scheme and the firm wanting to diversify its production bases away from China. Now, Apple provides a supplier list — a list that represents 98 per cent of the company's direct spend for materials, manufacturing and assembly of its products worldwide. This would include suppliers not only those involved in the production of the iPhone but also in other Apple products. As per this list, in 2023, 156 of the company's suppliers had manufacturing locations in China, 42 suppliers were located in Japan, 35 in Vietnam and 33 in South Korea, and 14 in India. Two years later the numbers would have changed slightly — as per a recent report there are now more than 20 component suppliers in India — but, they would still point towards the centrality of South and East Asia, and China in particular, to the global production system — a fact that cannot be ignored. If India wants to be a part of the production chain of other Apple products and grab a greater share of the value addition in the production process, it would need the smooth flow of components/materials into the country and more component manufacturers to be located here. And therein lies India's conundrum. What is India's China strategy? Should the country also be a part of RCEP (Regional Comprehensive Economic Partnership) and CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership)? In 2019, India chose not to be part of RCEP — the trade agreement that spans China, Japan, South Korea, Australia, New Zealand and the 10 ASEAN member states (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam). The decision to not join was in large part attributed to concerns over China. But the trade relationship with China has only deepened since. And that is the reality, contrary to the desire of reducing the dependence on China. In 2018-19, before India withdrew from RCEP, its trade deficit with China stood at $53.5 billion. By 2024-25, it had surged to $99.2 billion, without RCEP. India, though, is not alone. Even as the US has tried to reduce its reliance on China, its deficit with the country, though it has declined in recent years, stood at a staggering $295 billion in 2024. And this does not account for rerouting of exports through other countries. But, it's not just about companies like Apple. The issue around rare earth minerals — used in a range of sectors such as smartphones, TVs, EV cars, solar panels and jet engines — underlines China's centrality to the global production system. This reality cannot be wished away. China accounts for 90 per cent of global processing of rare earths. With the country placing restrictions on its exports, EV manufacturers in India have reportedly sought the government's intervention in the matter. If these supplies continue to be restricted, India's EV push, and thus its efforts in shifting towards a cleaner vehicle fleet, risk being affected. And that won't be the only sector that is likely to be impacted. There are some reports which suggest that the government has raised the issue of export curbs on rare earth minerals and magnets with China. But it's not just India. Even the US has been affected. In fact, one of the key aspects of the US-China agreement that was announced by Donald Trump is the upfront export of full magnets, and any necessary rare earths by China. It is difficult to see companies move their production to India on the scale that is needed for the country to emerge as a manufacturing powerhouse unless they can be sure of stable trade relations, of supply chains working smoothly, of the seamless movement of components/personnel from other jurisdictions. India needs a well thought out trade strategy. The lack of clarity partly explains the sluggish pace of investments in the country by domestic as well as foreign firms — both of whom seem to be more inclined to invest in other jurisdictions presumably because the risk-return matrix is not as favourable in India. A clear strategy should give these firms the confidence needed to invest in the country. Take care, Ishan

India.com

8 hours ago

• India.com

Most expensive iPhone is made for just Rs 42000 but Apple sells it for Rs 1.32 lakh due to...

iPhone price in India New Delhi: American tech giant Apple sells its iPhones in various models at premium prices, but did you know that the actual manufacturing cost of these devices is significantly lower? Last year, the most expensive models were iPhone 16 series and iPhone 16 Pro Max. But have you ever wondered how much it actually costs to make this phone that sells for lakhs? In this article, we will tell you the cost of making these handsets. When the actual cost is so low, you might wonder why Apple charges more than double the price from customers. Today, we're going to tell you about the manufacturing cost of the iPhone 16 Pro Max. In fact, shortly after this phone was launched last year, a report was released revealing details about its manufacturing cost. Manufacturing Cost of iPhone 16 Pro Max The Bill of Materials (BOM) cost of the iPhone 16 Pro Max is USD 485 (approximately Rs 41,992 or Rs 42,000), according to market research firm TD Cowen. The report also stated that this is slightly higher than the cost of the iPhone 15 Pro Max, which was USD 453 (around ₹39,222). Why does a phone made for Rs 41,000 sell for over a lakh? It's important to note that the BOM only includes the cost of raw materials and assembly. The final retail price also factors in expenses like software development, marketing, and logistics, which significantly increase the overall cost. Currently, the 256GB variant of the iPhone 16 Pro Max is being sold on Flipkart for Rs 1,32,900. Check Key Details Here: The higher cost of the iPhone 16 Pro Max compared to the iPhone 15 Pro Max is due to the upgraded hardware components used in the handset. The display and rear camera system of the iPhone 16 Pro Max are the two most expensive parts, costing around ₹6,700. In comparison, these parts in the iPhone 15 Pro Max cost Rs 6,300 and Rs 5,900 respectively. The introduction of new LPDDR5X RAM technology has also added to the total cost With the RAM in the iPhone 16 Pro Max priced at Rs 1,400, whereas the older LPDDR5 RAM in the iPhone 15 Pro Max cost only Rs 1,000. The A18 Pro chipset and storage in the iPhone 16 Pro Max cost Rs 3,400 and Rs 1,900 respectively. Even after accounting for logistics and software development, Apple maintains a healthy gross margin and earns a significant profit on each model of the iPhone 16 Pro Max.

Hindustan Times

12 hours ago

• Hindustan Times

Is this year the beginning of the end of smartphones?

Last month, a curious partnership in the Valley made me wonder on the future of smart devices and the way we access our digital universe. In a rather whimsical blog post, OpenAI announced the acquisition of Jony Ive's studio startup io for $6.5 billion. 'We have the opportunity to completely reimagine what it means to use a computer,' said Altman, adding that despite unprecedented capability and new technologies like AI, the digital experience is being shaped by traditional products and interfaces. A new technology like AI, he explained, requires a complete rethink of tools through which we interact with the digital universe. The first smartphone came into being in the early 1993, when IBM's Simon added email and fax to a phone's capability. (Representative photo) This acquisition would've become yet another corporate announcement, except for the timing of it. In the last couple of years, there's a feeling across Silicon Valley that smartphone as a device to interact with the digital world is not enough. New technologies like AR/VR, robotics and now AI need new products to explore them with. The new generation is approaching the digital world as an extension of themselves, through speech and not swiping or typing. As technology becomes more intuitive, we need new devices to reflect this change – more immersive and aural, devices that augment the real world and not take you away from it. Tech companies are putting their heads together to develop devices that are more immersive or approach digital through other senses like aural or even neural. Legacy companies like Meta, Apple and Google and startups like Neuralink are experimenting with smart glasses, wearables, iOT devices, smartwatches, neural computers and even spatial computers (like VisionPro) where digital media is integrated with our real-life experience. So far, none of these devices have worked, but it does feel like we're at a cusp of dramatic change. A senior vice president in Apple even acknowledged that in 10 years, iPhones could go the way of iPods - become irrelevant and retro. It's time for this change, I would say. After all, our way of interacting with digital spaces – through laptops, desktops and smart devices - has been the same for more than 30 years now. The first smartphone came into being in the early 1993, when IBM's Simon added email and fax to a phone's capability. In 1990s that there was a constant feeling of experimentation as the handheld phones and PDAs that could access the internet were being played with through product design. Companies across the world from USA to Japan wanted to integrate access to internet with a phone. The mid 2000s brought smartphones like Blackberry with QWERTY keyboards, which quickly made tapping and emailing the done thing to do. This changed dramatically when finger-operative touchscreen technology came out into the market. Within a couple of years in 2006, LG had used it to launch a touchscreen smartphone. And then Apple made it the new normal when it launched iPhones in 2007. Also Read: Do gaming smartphones really make sense in 2025? Though there have been amazing advances in the smartphone including camera capabilities, chip design and biometrics, the device design itself hasn't changed the way we interact with the digital world. There's a screen we swipe, touch and pinch. We check out social media, upload our photos on cloud and chat and email on the go. This staleness in the design was clear in Apple's recently concluded annual developer conference, WWDC 2025. The new iPhone 17 will be more or less the same as iPhone 16 with a few tiny tweaks. Jony Ive, whose company OpenAI acquired, was formerly Apple's chief design officer and led design teams for Apple's iconic products – the iPhone, the iPod and even the Macbook Pro – before leaving the company in 2019. This new project that he's working on, has got him (and us) excited. According to him, this time now, 2025, reminds him of three decades ago when he emigrated to Silicon Valley to design products that would interact with the Internet. 'I have a growing sense that everything I have learned over the last 30 years has led me to this moment,' he said in the acquisition announcement. The Wall Street Journal reported that Open AI is considering options that want to move consumers beyond screens into a unique combination of listening devices and cameras. 'Surely there's something beyond legacy products,' says Ive, adding that they've already built a prototype and are currently working on more AI-first devices. I know what you're thinking and frankly, I'm thinking the same. Smartphones are our lifelines. We do everything on these devices – from chatting to watching shorts and videos, to making payments on the go. We're multi-screen beasts today, our fingers constantly swiping or typing and ridden with RSI, our eyes fatigued. Also Read: AI needs to be open and inclusive like India Stack But the world is also changing in ways that make me think maybe we will use devices without screens as the enablers. Voice interaction has caught on. The way we fish for information is going from a typed search to a prompt we ask. There is an increasing unease about phone-addiction and screen time. We're all looking for a way out. Something that allows us to be digitally connected without exhausting us. Devices that are more intuitive, more immersive, aural and neural that become extensions of us so we can interact with digital spaces without choosing them over real life. All this signals to an experimentative market which is ready for something new. I can't wait to find out what replaces my screens in the near future. What about you?