Apple Contemplates Moving 15 To 30 Per Cent Of Production Capacity Outside Of China Over Trade War: Report

Apple Contemplates Moving 15 To 30 Per Cent Of Production Capacity Outside Of China Over Trade War: Report

Apple is exploring a shift of anywhere from 15 per cent to 30 per cent of its production capacity outside of China to somewhere in Southeast Asia, according to a new report from the Nikkei Asia Review. The potential move is getting billed as a “fundamental restructuring” of Apple’s supply chain.

The report cites several unnamed sources with “knowledge of the situation,” though it’s unclear if any of those people work at Apple or its major contractors for the assembly of iPhones and iPads like Foxconn. Apple did not immediately respond to Gizmodo’s request for comment Wednesday morning.

Apple’s wandering eye for production capabilities outside of China shouldn’t be a surprise to anyone who’s paying attention to the US-China trade war. The spat, kicked off by President Donald Trump’s rigid ideological belief that China is taking advantage of the U.S. on trade, shows no signs of cooling off.

But there is one observation that’s particularly curious in the new report. Apparently it wouldn’t matter if the trade war ended tomorrow, Apple would still be exploring ways to move outside of China.

From the Nikkei Asia Review:

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. Apple has decided the risks of relying so heavily on manufacturing in China, as it has done for decades, are too great and even rising, several people told Nikkei.

That’s an interesting development, to say the least. But it’s not just Foxconn that may lose business in China if they don’t move some operations to a place like Vietnam or India.

Again, from the report:

Key iPhone assemblers Foxconn, Pegatron, Wistron, major MacBook maker Quanta Computer, iPad maker, Compal Electronics, and AirPods makers Inventec, Luxshare-ICT and Goertek all have been asked to evaluate options outside of China, multiple sources say. Many other Apple suppliers such as print circuit board and casing providers are closely monitoring where these major assemblers would shift their production.

Apple has already moved some iPhone production capacity to India through its contractor Wistron and even Foxconn has established Apple-focused factories outside of China. But at least 90 per cent of Apple production still occurs in China, and any moves away from the country would harm its economy considerably.

As the Nikkei Asia Review notes, it’s estimated that as many as 5 million jobs in China depend on Apple’s presence, though Apple only employs roughly 10,000 people in the country directly.

Just don’t expect those Foxconn jobs to move to the U.S. anytime soon. Despite getting $6 billion worth of subsidies and infrastructure investments from the state of Wisconsin, Foxconn’s facilities in the southeastern part of the state are a ghost town where workers are simply moving dirt around.

There’s no timeline for Apple’s potential move outside of China—at least none that we know about yet. But that hasn’t stopped suppliers from trying to guess when the big shifts might take place.

“It’s really a long-term effort and might see some results two or three years from now,” one anonymous supplier told the Nikkei Asia Review.

“It’s painful and difficult, but that’s something we have to deal with.”

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