This is iPhone City, a Foxconn manufacturing campus in Zhengzhou, China, with a population of as much as 300,000, the size of Pittsburgh. The facility at one point made 85% of the pro lineup of iPhones, but now that's starting to change. Other Foxconn factories like this one in southern India have been tapped to build iPhones, and facilities like this one in Vietnam are expanding to produce other products that were once mainly made in China. That's because protests at the Zhengzhou factory and nearly three years of COVID restrictions in China have helped propel Apple to ask its suppliers to shift production elsewhere. But supply chain analysts say China's finely tuned production system won't be easy to replace.
So here's why Apple and its suppliers face an uphill battle when it comes to building new iPhone cities in India and Vietnam. Over the past two decades, Apple has looked primarily to Foxconn, the world's biggest electronics manufacturing company. to turn its product designs into reality. Since it first began making iPhones in 2010, Foxconn's facility in Zhengzhou has stood out for its efficient ecosystem. It excels at collecting the hundreds of required parts from manufacturers and assembling the functioning devices to be shipped out to customers.
Supply chain analysts say China has been the best at this because many of these parts and the metals needed to make them are refined and built within the country. But assembly plants in India and Vietnam won't have such easy access to these components. According to its latest list of suppliers, Apple works with more than 180 companies, and about 150 have operations in China. Just compare that with Vietnam, where only 26 Apple suppliers have operations, while India only has 11. That means assemblers in these countries would have to import more of the parts needed to make Apple products, a process with plenty of paperwork and delays. Once the parts arrive, factories need a lot of workers to assemble the many components that go into Apple products.
To maintain having hundreds of thousands of workers in iPhone City and Zhengzhou, Foxconn provides on-site accommodation. That has allowed workers from all around the country to live and work at the factory. But India's Foxconn factory, where Apple is now building new iPhones from the beginning of their production cycle, is much smaller with fewer workers.
So the company buses them in from nearby hostels. and villages that are mostly within a 50-mile radius. Analysts say to meet this increasing demand, Foxconn's factory in India may eventually need the type of on-campus accommodation seen in Zhengzhou.
Apple and Foxconn did not respond to requests for comment about the challenges facing facilities in India and Vietnam, such as import delays and workforce shortages. In Apple's earnings call in April, CEO Tim Cook said the company is continuing to optimize the production process. Our supply chain is truly global, and so the products are made everywhere.
Even though Apple is starting to look elsewhere, analysts say it's unlikely to completely leave China's efficient system anytime soon. So in the meantime, people involved in Apple's supply chain say the company may look to other suppliers within China to reduce its reliance on Foxconn. That may mean in the future, a wider range of companies will be building more of our iPhones and other Apple products.