iPhone 13 Manufacturing in India

Apple (AAPL) Set to Start iPhone 13 Manufacturing in India

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Apple AAPL is reportedly planning to mass produce iPhone 13 in India beginning February 2022. Per a 9TO5Mac report, which cited an article from Economic Daily, Apple has started trial producing iPhone 13 in Hon Hai’s factory in Chennai, India.

Apple’s intention of reducing its dependence on China as a manufacturing hub is well known, and it has been trying to do the same since 2019. Apple is currently planning to shift 15-30% operations out of the country. Coronavirus-induced supply chain disruptions and rising labor cost in China have been detrimental to Apple’s profitability.

Supply chain constraints hurt revenues roughly by $6 billion due to industry-wide silicon shortages and COVID-related manufacturing disruptions in the fiscal fourth quarter.

Expansion of its manufacturing hub in India is expected to boost Apple’s supply of iPhones. It is estimated that 20-30% of iPhones produced in India will be exported. Moreover, it will boost the supply of iPhone 13, which has garnered significant demand in the local market.

Strong iPhone Demand to Drive Apple’s Prospects
Apple has benefited from strong demand for 5G-supported iPhones. In the fiscal fourth quarter, iPhone sales increased 47% year over year to $38.87 billion and accounted for 46.6% of Apple’s total sales. iPhone sales were driven by strong demand for the iPhone 12 family of devices. Apple stated that iPhone 13 has also witnessed strong customer response.

Markedly, Apple has outperformed the Computer & Technology sector just like its fellow PC-maker, Lenovo LNVGY, on a year-to-date basis.

However, Apple has underperformed its Computer- Mini Computers peers, 3D Systems DDD and HP HPQ

Apple, which currently has a Zacks Rank # 3 (Hold), is up 32.4% on a year-to-date basis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In contrast, Lenovo, HP and 3D Systems’ shares have returned 24.8%, 51.6% and 109.5% year to date.

Apple’s excessive dependence on iPhone is a risk, given the increasing supply chain constraints. Per a 9TO5Mac report, Apple has missed targets for iPhone production in September and October by around 20%. Apple has produced approximately 85 million units iPhone 13, down from its initial goal of 95 million.

Supply Chain constraints and shortage of chips have impacted the production of not only iPhone 13, but also of older iPhones, which also dropped by 25%.

Apple iPhone Dominates 5G Smartphone Market
According to latest Strategy Analytics data, cited by 9TO5 Mac, Apple is dominating the 5G smartphone space in terms of global 5G shipment share, thanks to strong demand for iPhone 13.

Apple is now speculated to add a 48 mega-pixel lens for its upcoming iPhone in 2022 and periscope lens in 2023, according to Apple analyst Ming-Chi Kuo.

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