Apple Inc. has reportedly told some of its contractors that it now wants to increase production of its products outside of China.
Indeed, Beijing is currently under strict anti-COVID measures, delaying the production of iPhones and Macs.
Apple makes India its new hub
According to the Wall Street Journal, India and Vietnam, which are already production sites for the tech giant, are among the countries considered as alternative options to China.
This move by Apple, being the largest US company by market capitalization, will influence the thinking of other US companies considering reducing their reliance on China for manufacturing or key materials.
This follows the country’s indirect support for Russia for its invasion of Ukraine and the closures of some cities due to COVID-19 cases.
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Analysts say more than 90% of Apple products, including iPhones, iPads and MacBook laptops, are made in China by outside contractors.
In April, Apple CEO Tim Cook spoke about the company’s supply chain challenges. He said their supply chain is global and products are made everywhere. They will continue to seek to optimize.
Lockdowns imposed in Shanghai, China, and other cities as part of the country’s anti-COVID policy have disrupted the supply chain of many Western companies.
In May 2021, production of Apple’s iPhone 12 in India was affected after workers were affected by COVID-19.
Reduced production of Apple products in China
In April, the tech giant warned that the resurgence of COVID-19 would hamper sales by up to $8 billion in the current quarter, according to Reuters.
China’s strict anti-COVID rules have prevented Apple from sending its executives and engineers to the country since 2020, meaning it has become more difficult for them to check production sites in person.
The 2021 power cuts have also tarnished the country’s reputation for reliability.
With the exception of India, China was the one with a pool of skilled workers that exceeded the entire population of other alternative countries in Asia.
Apple sees India as the closest thing to the next China because both have a similar population and both offer low cost. Apple is currently in talks with some existing vendors about expanding into India, including production for export.
India made 3.1% of the world’s iPhones in 2021, and the proportion is expected to rise to 6% or 7% in 2022, according to Business Standard.
According to some analysts and suppliers, there will be a difficulty for China-based assemblers when it comes to setting up the workshop as relations between New Delhi and Beijing have deteriorated since the two countries’ militaries fought. in 2020.
That’s why China-based manufacturing contractors doing business with the tech giant are looking to Vietnam and other Southeast Asian countries.
Vietnam, on the other hand, is already a smartphone manufacturing hub for Apple rival Samsung Electronics.
Luxshare Precision Industry Co., a China-based manufacturing contractor, already manufactures the Apple AirPods in Vietnam. Even Luxshare customers are worried about power supply issues and China’s zero COVID policy.
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Written by Sophie Webster
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