As the integration of artificial intelligence (AI) and robots accelerates across industries, concerns about job displacement have become increasingly prevalent. In a bold move to enhance efficiency and reduce dependency on manual labor, Apple is reportedly accelerating its automation for iPhone manufacturing.
According to The Information, the Cupertino giant aims to slash the workforce on iPhone final assembly lines by as much as 50% in the coming years. This strategic shift follows several incidents, including worker protests in China, and is in line with Apple’s strategy to broaden its manufacturing footprint beyond China.
A Multi-Faceted Decision
There are several reasons behind Apple’s push for automation. One significant driver is the inherent challenges of managing a large, predominantly unskilled human workforce. This challenge was dramatically highlighted in November 2022, when hundreds of workers protested at Foxconn’s flagship iPhone plant in China. These protests escalated to the smashing of surveillance cameras and windows, fueled by grievances over delayed pay and insufficient food. Due to this disruption, Apple witnessed a notable 14.9% YoY decline in its iPhone shipments, totalling 72.3 million units in Q4 2022. As a result, the revenue from iPhones dropped 8.2% YoY to $65.8 billion during the holiday quarter.
Managing such a massive human labour force involves logistical challenges and increases the risk of inconsistencies and disruptions in production.
Additionally, the COVID-19 pandemic exacerbated supply chain shortages and delays, further impacting iPhone production.
Therefore, Automation presents a strategic solution to these challenges by offering several key benefits.
Benefits of Automation
Firstly, automation enhances efficiency by performing repetitive and precise tasks faster and more accurately than human workers. This leads to greater consistency in production quality, as machines are not subject to fatigue or human error.
Furthermore, automation streamlines operations by reducing the dependency on manual labour, thereby mitigating the risks associated with labour disputes, absenteeism, and turnover. This can result in substantial cost savings over time.
Although the initial investment in automation technology is significant, the long-term benefits of continuous operation and reduced maintenance compared to managing a large workforce are considerable.
Another factor driving Apple’s automation efforts is its growing focus on India, the fifth-largest smartphone market for iPhones. By automating processes, Apple can potentially reduce its human reliance on Chinese manufacturing and establish a more geographically diverse supply chain. This diversification can mitigate risks associated with geopolitical tensions and potential disruptions in any single region.
Impact on China
It is important to note that Apple has already commenced automation for the final assembly of the iPhone 15 in China.
Under the leadership of Peter Thompson, Apple’s operations vice president, the company has successfully automated tasks that traditionally required manual labour. This includes the installation of metal brackets and flexible printed circuit boards, tasks previously performed by human workers.
These automation initiatives have had a tangible impact on employment within Apple’s supply chain in China. Reports suggest that thousands of positions have been eliminated, with some processes seeing a workforce reduction of up to 30%.
Despite initial setbacks in automating certain components for the iPhone 16 due to quality concerns, Apple remains committed to exploring automation as a means to enhance efficiency and maintain product quality.
According to Apple’s annual supply chain report, the total number of employees at its manufacturing partners has fallen from 1.6 million in 2022 to 1.4 million in 2023.
Now, a crucial question emerges: If Apple automates its iPhone production in India within the next few years, how might it affect local employment and Apple’s overall position in the market?
Impact of iPhone Automation on India
If Apple implements automation in its Indian iPhone manufacturing facilities, it could significantly impact local employment.
Under the production-linked incentive (PLI) scheme for smartphones since August 2021, Apple’s ecosystem has directly employed over 150,000 people in India, mostly young job seekers aged 19-24. Indirectly, an estimated 300,000 additional jobs have been created indirectly.
Beyond contract manufacturers and suppliers, Apple’s operations in India, including iOS app development, support over 1 million jobs.
Overall, Apple’s vast ecosystem in India is estimated to have generated more than 400,000 jobs directly and indirectly in the past 32 months. Therefore, if Apple replaces these jobs with machines in the future, it could have severe consequences for their livelihood and India’s overall employment situation.
For a country like India, which is already grappling with unemployment and a large youth population entering the job market, any significant reduction in job opportunities due to automation could exacerbate existing socio-economic challenges. Moreover, it could impact the broader ecosystem of ancillary jobs and services that support Apple’s operations in the country.
