India has emerged as a clear winner, with some analysts predicting that the world's third-largest country could soon become one of Apple's preferred suppliers. For more than three years, companies like Apple have been operating in China under the uncertainty of not knowing when and where the next lockdown would occur.

Late last month, footage showing thousands of people dragging luggage through Zhengzhou's city streets and highways began to circulate on the internet.

They were Foxconn Technology Group employees fleeing the world's largest electronics manufacturing company. Some escaped by scaling barbed-wire fences, while others walked 25 kilometers home.

The virus forced them to work within a closed-loop system, which exposed them to the virus and left them without basic necessities. A few days later, China closed down the industrial park where the factories are situated, known as "iPhone City

A lockdown at a Foxconn plant in Zhengzhou, China, has hampered operations at Apple's preferred iPhone manufacturing facility. Foxconn stated in a memo last week that production had slowed to "seriously decreased capacity." This isn't the first time that government-enforced lockdowns or closed-loop systems have hampered production this year.

The goal of zero COVID in Beijing has confined people to retail malls and office buildings, industrial floors, and even Disneyland. China's viral containment efforts, which are among the most stringent in the world, have exacerbated anxiety, sadness, and psychological damage. The strategy has resulted in significant production and sales disruptions for global businesses operating in China.

Over the spring and summer, Apple lost $4 billion in anticipated iPad and Mac sales. Starbucks' China sales dropped 40% in that quarter due to Shanghai's arduous 60-day spring shutdown. In the same period, Tesla delivered 18% fewer vehicles than in the previous quarter. Only 55% of companies polled by the American Chamber of Commerce in Shanghai are optimistic about their five-year business prospects in China.

China's adherence to zero COVID and trade tensions with the U.S. have made it increasingly difficult for businesses to solely rely on Chinese suppliers for their products, an expert has said. Foxconn's mass worker escape and subsequent lock down in Zhengzhou only reinforces the "severity" of China's virus containment strategy.

The consequences of China's zero-COVID policy is an "absolute gut punch for Apple in its most important holiday quarter," Dan Ives, managing director at investment firm Wedbush Securities, tweeted last week. "The albatross continues in China," he says.

Apple said on Sunday that it will make fewer iPhones and that shipments will be delayed. iPhone production could slow as much as 30% because of the recent events in China. Unpredictability in Chinese supply chains has created glaring uncertainties for firms like Apple, a UCLA professor says.

India has a "once-in-a-lifetime opportunity" to sway global companies as China's zero-COVID strategy rattles their supply chains, an analyst says. In June 2020, India announced a $6.6 billion incentive scheme to attract global firms to produce their electronics in India. Analyst: "India has limited time—and realizes that."

India's strong state support for smartphone manufacturing is incentivizing mobile-phone makers to ramp up production in the country. Apple also wants to dominate India's fast-growing high-end smartphone market, which is expected to hit 10% next year from 7%. Foxconn moving production to India from China is also about getting closer to a high-growth market.

The Zhengzhou lockdown prompted Foxconn and Apple to accelerate iPhone production in India. Analysts now expect a bigger and quicker-than-expected iPhone production shift to India. In September, JPMorgan analysts predicted that India could produce 5% of Apple's iPhone 14 inventory and 25% in three years. Ming-Chi Kuo expects iPhones made in India—still by Foxconn—to grow by at least 150% next year.

Apple's iPhone production in India is likely to double next year, according to analyst Kuo. India's smartphone production surged by 126% from 2021 to 2022, making the country the world's second-largest manufacturer. Apple isn't alone in diversifying its production to India. Rivals like Samsung, Xiaomi, and Google (which makes the Pixel smartphone) are also shifting production there.

Apple, Abbott, Boeing-Tata, Flex, and Pratt & Whitney are just the start of this wave of multinationals shifting to India, an expert says. India needs to build out the infrastructure and talent that these companies need. Apple is pursuing a "China plus one" strategy that sees them retaining operations in China while diversifying supply chains.

India will continue in its mission to take advantage of China's zero-COVID pain, argues former Indian ambassador to China Giridharadas, after the Foxconn factory in China was shut down. The Chinese authorities have now lifted the lock down in Zhengzhou, but the compound remains under a strict closed-loop system, with no indication when it will end.

“India is only getting started.”