Apple Inc. plans to move production out of China, by far the dominant country in the company’s supply chain.
Suppliers are being to asked plan for moves elsewhere in Asia, particularly India, Thailand, and Vietnam, to reduce the influence of Foxconn Technology Group.
In a series of tweets, analyst Ming-Chi Kuo said the main production location outside of China for Apple’s future MacBooks may be Thailand. Kuo noted that Apple’s entire range of MacBook Air, and MacBook Pro models are currently assembled in Chinese factories.
Turmoil at iPhone City – a giant city-within-a-city in Zhengzhou, China, saw as many as 300,000 workers involved in violent protests last week. At one point, iPhone City made about 85% of Pro iPhones.
Coming after a year of upheaval in China’s manufacturing sector, according to Bangkok Post, Apple no longer feels comfortable having so much of its business tied up in one place.
Alan Yeung, a former US executive for Foxconn said…
“In the past, people didn’t pay attention to concentration risks. Free trade was the norm and things were very predictable. Now we’ve entered a new world.”
Apple’s answer is a bigger pool of assemblers — even if some are still based in China.
Apple has told its manufacturing partners that it wants them to start trying to do more of their work outside of China. However, the slowing global economy has made it hard to allocate personnel with new suppliers and in new countries.
Apple and China have spent decades tying themselves together in a relationship that, until now, has mostly been mutually beneficial, and change won’t come overnight. Apple still puts out new iPhone models every year, alongside steady updates of its iPads, laptops, and other products.
Yet the transition is underway, driven by two causes. Chinese youth are no longer eager to work for modest wages on assembly lines. And three years after Covid-19 started circulating, China is still trying to crush outbreaks with measures like quarantines, as many other countries have returned to pre-pandemic norms.
All this comes on top of more than five years of heightened US-China military and economic tensions and US tariffs on Chinese goods.
Apple’s longer-term goal is to ship 40% to 45% of iPhones from India, compared with a single-digit percentage currently. Suppliers say Vietnam is expected to shoulder more of the manufacturing for other Apple products such as AirPods, smartwatches and laptops.
For now, consumers shopping are stuck with some of the longest wait times for high-end iPhones in history.