Culture 3 min read

Apple Production to Move From China to Southeast Asia

A recent report claimed that Apple has ordered its suppliers to evaluate the cost of moving the Apple production capacity from China to Southeast Asia.

Image Credit: Pixabay

Image Credit: Pixabay

According to recent reports, the Apple production capacity in China is currently being reviewed as the American company prepares for a fundamental supply chain restructuring.

In response to the on-going trade war between China and the U.S., Apple could move 15 to 30 percent of its production to Southeast Asia. The tech giant has reportedly asked its leading suppliers to evaluate the potential cost of the move.

While the trade war has already affected Apple’s share price, the new tariff – if it goes into effect – could change everything. The considerably expensive Apple products could cost even more.

Aside from the risk of tariffs, other factors are contributing to Apple’s possible decision to move out of China.

A post in Nikkei reads:

“The California-based tech giant’s request was triggered by the protracted trade tensions between Washington and Beijing, but multiple sources say that even if the spat is resolved, there will be no turning back.”

According to the post, Apple does not want to centralize its production in one country. As such, it’s following the big diversification trend to gain more flexibility.

Besides, China’s lower birthrate not only shrank the pool of workers, but it also raised labor costs. So, with or without the $300 billion tariffs, Apple would likely move part of its production out of China.

Apple Production and Suppliers Are Ready to Leave China

Changing the Apple production and manufacturing location is not easy for suppliers. However, the move is essential to keeping Apple’s business.

Some of the suppliers that may have to move out include Pegatron, Foxconn, iPad maker Compal Electronics, and MacBook maker Quanta.

The AirPod makers – Inventec, Luxshare-ICT, and Goertek – are also included.

As disruptive as the process may be, suppliers seem ready to move.

A couple of years ago, Apple supplier, Winstron started making iPhones in Banglore, India. Pegatron has already revealed its intention to move iPad and MacBook production out of China.

Foxconn is currently trying to build a 13,000 worker factory in Wisconsin, United States.

With that said, the change isn’t going to happen overnight. Apple’s supply chain is so complex that the relocation could take years.

In a statement to the press, Wedbush analyst, Daniel Ives speculated:

“In a best-case scenario, Apple would be able to move 5%-7% of its iPhone production likely to India in the next 12 to 18 months.”

That means, Apple is still invested in a long-term trade agreement between the United States and China.

Read More: Apple Watch is Getting a New Feature to Track Blood Glucose

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Sumbo Bello

Sumbo Bello is a creative writer who enjoys creating data-driven content for news sites. In his spare time, he plays basketball and listens to Coldplay.

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