India’s big play to make iPhones


October 12, 2020

PLUS: Waymo’s driverless taxis are (kinda) here.
October 12, 2020
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The Big Idea

India’s making a big play for China’s iPhone production

One of the main bear cases for Apple is its close ties with China, especially on the manufacturing front. According to Marker, China accounted for 90% of Apple’s product factories in 2019.

The double whammy of COVID-19 and the China-US trade war has forced Apple to hedge its bets.

If only there was another country with 1B+ people… oh wait, the subcontinental giant right next door.

India is shelling out to attract smartphone producers

By launching a $6.6B+ federal incentive scheme.

Three Apple manufacturing partners are among the 16 firms that will benefit from the plan.

India projects that attracting these manufacturers will employ 800k people and lead to production of smartphones and electronics totaling $143B over the next 5 years.

When the $2T Apple says “jump”…

… its partners say, “umm, sure, but can you also tell us where you want our plants?

As noted by Marker, 3 of Apple’s aforementioned contract partners — all based in Taiwan — made relocation headlines over the summer:

  • Foxconn started manufacturing the iPhone 11 in India in July and has marked $1B worth of investments for the country
  • Wistron started assembling the iPhone SE in August and began a trial run on the new iPhone 12 (official announcement tomorrow)
  • Pegatron registered a subsidiary in India

India has a wage advantage

With monthly manufacturing salaries roughly ⅓ of China’s $700/mo. It has a long way to go to match China, though.

In fact, Apple was looking at India as far back as 2015, but the country’s environmental and safety standards weren’t up to snuff.

Today, India’s infrastructure still lags and its component supplier base is middling (Apple has 135 suppliers in China vs. 7 in India).

Another prize: the retail market

There are 1.35B people in India, more than half of whom still don’t have smartphones. The country also has significant room for catch-up growth: China’s GDP per capita is $10.1k vs. $2.2k for India.

Apple was recently allowed to set up an online store in India — and physical retail locations are expected to follow.

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Snippets
  • Yelp will now flag businesses accused of racism. Yelp is trying to avoid becoming a forum for accusations by halting reviews until an internal investigation is conducted.
  • A shocking report from The Information: So far, no one wants to buy Quibi.
  • Even Peloton seems to be cracking down on QAnon-related hashtags.
  • Amazon is canceling Crucible, the company’s failed first attempt at a big-budget video game.
  • In the US and UK, influencers are taking the first steps toward unionizing.
  • Bonus: Cue the “Boomer” jokes: Folgers instant coffee is having a moment with millennials.
Buckle Up

Waymo’s driverless cars are open to the public. And Elon’s not impressed.

Google’s autonomous vehicle (AV) division, Waymo, has been working on a robotaxi for years.

Last week, it opened up its Waymo One service to the public. With a click of a button, you can now relive your childhood soccer weekends by cruising in a driverless Chrysler Pacific minivan.

There are a few catches, though: someone will remotely monitor the vehicle and you have to be in a 50-square-mile “riders only” service area located in Phoenix.

Arizona is the home for self-driving cars

In 2015, Governor Doug Ducey — the former CEO of post-soccer practice favorite Cold Stone Creamery — signed an executive order supporting AV testing in the state.

Waymo has been in Arizona since 2016 and debuted its 1st public driverless minivan joyrides in November 2019.

The entire driverless fleet in Phoenix numbers between 300 and 400 vehicles, but Waymo will continue to expand capacity and geographic coverage.

Autonomous ride hailing is a massive opportunity

Ark Invest’s Tasha Keeney highlighted 2 points in light of Waymo’s news:

  • Future cash flows from the industry are worth $1T+
  • Fully realized AVs will cost $0.25 per mile, half the cost of personal driving

As for how Waymo fits into the competitive landscape, Elon Musk left some thoughts on Keeney’s tweets: “Waymo is impressive, but a highly specialized solution. The Tesla approach is a general solution.”

We can’t speak to the veracity of his statement, but we can confirm that A+ corporate shade like this is exactly why Musk believes Tesla no longer needs a PR team LOL.

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Oversampled

Free samples are coming to online shopping

If your days of going haywire on the free sample section of Lush feel like a distant fever dream, we have some good news: The ecommerce world is going all in on samples.

This year, one sampling company, Brandshare, has taken its talents to online retailers like Walmart.com.

Brandshare’s algorithm learns what you like, and it ships recommended products to you — even when you don’t ask for them.

Buying a box of snacks from Walmart? A Brandshare-recommended granola bar might show up with it.

It’s actually pretty smart

Online ads for a granola bar that is “recommended for you” are easy to ignore. But if that granola bar shows up at your place? Who wouldn’t try a taste?

Brandshare works with 800+ partners and claims its samples have a 14% to 33% conversation rate.

Even Amazon has dabbled with free samples. Last year, it announced a free sample mailing program in partnership with Maybelline, Calvin Klein, and KIND.

But by the end of the year, the company had pulled the plug.

The problem? Mailed samples are kind of creepy

Amazon didn’t give a clear reason for nixing its free-sample program, but CNBC offered a clue.

Nothing says, “We know too much about you” like clicking on a batch of clown makeup in a sleepless haze, then finding a free sample on your doorstep 2 days later.

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Today’s email was brought to you by Michael Waters, Caroline Dohack, and Trung Phan.
Editing by: Zachary “Made in India” Crockett, Zbigniew Payne Diaz (Recently Discovered Uncle from Warsaw).

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