Apple’s audacious expansion into SEA. Is Thailand next?

• Apple is apparently in talks with suppliers to make MacBooks in Thailand.
• Apple has mass-produced its Apple Watch in Thailand for over a year.
• A supplier is said to be building new plants in Thailand for Apple, and construction of a new factory for MacBooks and other products will be completed this year. 

For more than a year, Apple Inc has been mass-producing its Apple Watch in Thailand. The location doesn’t come much as a surprise, considering the tech giant’s partners have been looking to increase their production capacity in Southeast Asia to reduce their dependence on China.

Fast forward to this week, sources from three suppliers told Nikkei Asia that Apple is in talks with them to make MacBooks in Thailand as well. It is, as expected, a part of the company’s ongoing efforts to expand its manufacturing presence beyond China. The report by Nikkei noted that suppliers involved in the talks have manufacturing complexes in Thailand for other clients.

Therefore, they are discussing the possible assembly and production of components and modules for MacBooks. “Ideally, Apple asked us to set up facilities in Vietnam for MacBooks, following in the footsteps of other Apple suppliers, but we offered an alternative option of building the product at our Thailand plants, which still have a massive space that can be reserved for the client,” a senior executive at one of the suppliers told Nikkei.

In short, the supplier suggested that since MacBook assembly will begin in Vietnam first, they could first support the components from their Thailand plants, too. “It will only take two to three days of logistics and customs clearance,” the supplier added. On the other hand, another supplier said his company is building new plants in Thailand for Apple, and a new factory for MacBooks and other products will be completed this year. 

Then there’s a third supplier who said the company has set up a trial production line for Apple MacBooks in Thailand, but the company is also looking for a plot of land in Vietnam as a backup plan. To recall, the iPhone maker had plans to begin mass-producing MacBooks in Vietnam in the first half of this year, and it will also be the first time the flagship product will be made outside China.

Although Apple and China share a “symbiotic kind of relationship,” according to Apple CEO Tim Cook on his first trip to China in three years, last month, the tech giant is left with little to no choice but to dilute its manufacturing focus on China to balance out the risk. Geopolitical tensions have been forcing Apple to rethink its supply chain.

The stark reality is that shifting production away from China is easier said than done, considering Apple and its suppliers have spent decades building a massive supply chain. However, it is safe to say that Apple and its partners/suppliers have seen nailing in their efforts.

Southeast Asian countries and India have mainly been key beneficiaries of the trend toward supply chain diversification. To put it into context, Apple has gradually moved some production capacity for AirPods, the Apple Watch, iPads, and MacBooks to northern Vietnam in recent years. 

Today, the number of Apple suppliers in the country increased to 25 in 2021 from 14 in 2018, when the trade war started escalating, according to Nikkei’s analysis of the company’s official list of suppliers. Apple also upped its ante in Malaysia for some Mac production, while India is, by far, Apple’s biggest success story since it began diversification.

Apple’s ‘Made in India’ push has been paying off, as data from 2022 shows that Indian iPhone units made and volume shipped soaring to levels never-seen-before. Counterpoint Research data shows that the shipment value of Indian-made iPhones grew 162% year-on-year (YoY) in 2022, while volume rose by 65%.

At the rate that Apple was accelerating its Indian production in 2022, the company has managed to capture 25% of the total value of the smartphone market in India, an impressive feat from a mere 12% in 2021. A Bloomberg report indicated that Apple assembled over US$7 billion of iPhones in India last fiscal year, tripling production in the world’s fastest-growing smartphone arena after accelerating a move beyond China.

“The US company now makes almost 7% of its iPhones in India through expanding partners from Foxconn Technology Group to Pegatron Corp., ” said people familiar with the matter. That’s a significant leap for India, which accounted for an estimated 1% of the world’s iPhones in 2021,” Bloomberg said.

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