Apple moves AirPods production to India – Is Garmin at risk in Taiwan?

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AirPods to be made in India

Some time ago Apple made the call to offshore huge production volumes to China, so making use of cheap labour and a good tax regime. That was a great move for profitability at the time but things have changed.

Labour costs in China are no longer anywhere as favourable as they were and the main reason for still making stuff there would be because you’ve already invested in plant and machinery.

Add to that, Trump & Biden both make it clear that China may not be as friendly as we perhaps thought and the USA has turned notably more aggressive toward China than it has been for many years.

Part of this is because of renewed fears of a Chinese invasion of Taiwan, I talked about the geopolitical imperative for that to happen a few weeks back, here. And part is also because of its economic & military ties to Russia.

Garmin: Country Risk Investment Thoughts – Opinion

So we see corporate America is now starting to take all of this geopolitical stuff a lot more seriously and it is very significant that Apple has made another move away from China and, in this instance, toward India.

Nikkei Asia reports on Apple’s latest response.

Apple is asking suppliers to move some AirPods and Beats headphone production to India for the first time, in a win for the South Asia nation as it attempts to rise in the global supply chain.

The move is part of Apple’s gradual diversification from China, as it looks to lower the risk of supply chain disruptions stemming from the country’s strict zero-COVID policy and tensions with the U.S.

That’s obviously a somewhat toned-down statement and, in fact, China is facing ‘tensions’ with almost all Western countries from Australia to the UK. And it’s only going to get worse.

India

India superficially seems a good place to relocate, yet readers might be surprised that, for now at least, India is militarily tied to Russia, with Russia being a key arms supplier to that part of the subcontinent. The West, in fact, has had closer military ties with Pakistan and when you think about that country as a hiding place for some hardline Islamic terrorists, you’d be right to be surprised.

Anyway, the unfolding Russian debacle in Ukraine will probably demonstrate to India that it needs to arm itself with some proper Western weaponry. So India could well move more toward the West over the coming years.

We’ll see.

Garmin // Apple

So we will soon see Airpods from India. Perhaps, for similar reasons, the next generation of Forerunners will be made in Olathe (USA) rather than Taiwan?

 

 

 

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3 thoughts on “Apple moves AirPods production to India – Is Garmin at risk in Taiwan?

  1. I don’t care for products made in India. Would rather have it come from a foundry here in the USA, Japan or Taiwan. Even South Korea.

  2. Apple is diversifying manufacturing from Mainland China, but not Taiwan. They are very exposed to supply chain disruption in China from Covid or anything else. All of the A-series and M-series chips that apple uses in iPhones, iPads, and Mac computers are manufactured by TSMC in Taiwan.

    Taiwan currently has the premiere semiconductor foundries in the world. That isn’t going to change anytime soon. There are efforts underway to geographically diversify these high end chip fab capabilities but the capital investment is astronomical and it takes time. The CHIPS Act in the USA is part of that.

    China wants to have political and economic sovereignty over Taiwan but I don’t see that happening by force. Military invasion would destroy the foundries and be a Pyrrhic victory. It would definitely cause worldwide disruption for semiconductors and even greater economic catastrophe than the Russia aggression in Ukraine.

    I think the damage to the Russian economy caused by the Ukraine invasion was sobering to the Chinese leadership and makes it less likely that they will try to take Taiwan by force in the near term.

    Garmin have deep ties to Taiwan because Min Tao (the min in garmin) is Taiwanese-American born and educated in Taiwan. Maybe Garmin should diversify their manufacturing base. I hope that they have thought that through strategically.

    1. yes to all !

      my only conspiracy theory to add to what you say would be that perhaps China encouraged Russia to do what it did to see how others might react to an invasion of Taiwan
      Taiwan: But China HAS to take over China. If not now then when?
      Garmin/Taiwan: I’m sure they have thought things through strategically but sometimes when there is a catastrophic risk companies focus on the tiny chance of it happening…that chance is not so tiny anymore.

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