Apple is exploring moving 15% to 30% of its hardware production out of China, according to Nikkei. The company has a growing team studying supply chain relocation and has asked major manufacturing partners such as Foxconn, Pegatron and Wistron to assess the feasibility. With the United States imposing a 25% tariff on Chinese devices including mobile phones, laptops and tablets, Apple has put this plan on the table regardless of whether trade frictions are eased.
'A painful and difficult process' "Lower birth rates, higher labor costs and the risk of over-concentrating production in one country. These unfavorable factors will be taken into account with or without further tariffs," an executive at an Apple supplier told Nikkei. Although the White House has repeatedly stated that Apple is open to the idea of moving manufacturing from China to the United States, it is generally believed that production will be moved to Southeast Asian countries, with India and Vietnam seen as the main recipients of iPhone production capacity. Apple previously produced low-priced iPhone SE products in India, and last year the company was considering moving more production of premium products to the country to avoid the impact of import tariffs on smartphones. Foxconn recently stated that they have the ability to move all iPhone production for the United States out of China if necessary. Along with Vietnam and India, the labour markets of Mexico, Indonesia and Malaysia are also thought to be under consideration. At least one supplier said that they have established a large ecosystem of logistics and parts suppliers in China, and if one day they really have to switch, it will be a "painful and difficult" process. China has a large workforce of skilled workers, its infrastructure is more resilient, and it is not prone to problems such as power shortages. Moving production capacity is not a quick process and is expected to take at least 18 months. The overall impact on the supply chain is expected to appear in two to three years. Estimates show that about 5 million jobs in China depend on Apple's manufacturing supply chain in China, and Apple directly employs about 10,000 people in China. It is not clear how many of these jobs will be affected by the loss of 15% to 30% of production capacity. However, Apple currently has no timetable for when suppliers will need to respond to production transfer plans. |
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