Apple explores moving some production out of China: report

June 20, 2019 09:27
Apple has reportedly decided the risks of depending heavily on manufacturing in China are too great and even rising. Photo: AFP

Apple Inc. has asked its major suppliers to assess the cost implications of moving 15 to 30 percent of their production capacity from China to Southeast Asia as it prepares for a restructuring of its supply chain, Nikkei Asian Review reports.

Apple’s request was a result of the extended Sino-US trade dispute, but a trade resolution will not lead to a change in the company’s decision, Nikkei said, citing multiple sources.

The iPhone maker has decided the risks of depending heavily on manufacturing in China are too great and even rising, the report said.

Earlier this month, credit rating agency Fitch said it views Apple, Dell Technologies Inc. and HP Inc. as potential blacklist candidates if China blacklists US companies in retaliation for restrictions on Huawei.

Key iPhone assemblers Foxconn, Pegatron Corp., Wistron Corp., major MacBook maker Quanta Computer Inc., iPad maker Compal Electronics Inc., and AirPods makers Inventec Corp., Luxshare-ICT and Goertek have been asked to evaluate options outside of China, Nikkei said.

The countries being considered include Mexico, India, Vietnam, Indonesia and Malaysia. India and Vietnam are among the favorites for smartphones, Nikkei said, citing sources who did not want to be identified as the discussions are private.

Some members of Apple’s capital expense studies team have been negotiating production plans with suppliers and governments over monetary incentives that could be offered to lure Apple manufacturing, the report said.

A deadline has not been set for the suppliers to finalize their business proposals, Nikkei said, adding that it would take at least 18 months to begin production after choosing a location.

Last week, Foxconn said it had enough capacity outside China to meet Apple’s demand in the American market if the company needed to adjust its production lines, as US President Donald Trump threatened to slap tariffs on US$300 billion more of Chinese goods. Reuters

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