Apple might shift '15 to 30 per cent' of iPhone, MacBook production out of China

Carly Page
@CarlyPage_
19 June 2019

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APPLE IS CONSIDERING shifting a chunk of its production out of China, spurred by the ongoing trade war between the country and the US.

So says Nikkei, which reports that Apple has asked its suppliers to size-up the cost implications of shifting 15 to 30 per cent of their production capacity from China to Southeast Asia; currently, approximately 90 per cent of all Apple products are assembled in China.

The firm has reportedly asked "key" iPhone, iPad and MacBook assemblers, including the likes of Foxconn, Pegatron and Wistron, to evaluate options outside of China, with Mexico, India, Vietnam, Indonesia and Malaysia being touted as potential production sites.

Though incentivised by the intensifying trade war, which will see the introduction of a 25 per cent tariff on devices phones and other devices imported from China at the end of June, it sounds like Apple wants to shift production regardless of whether the dispute gets resolved.

"A lower birthrate, higher labour costs and the risk of overly centralizing its production in one country. These adverse factors are not going anywhere," one executive with knowledge of the situation quipped.

"With or without the final round of the $300bn tariff, Apple is following the big trend [to diversify production], giving itself more flexibility."

The shift isn't expected to be an easy process, though, as one supplier quoted by Nikkei says it'll be a "painful and difficult" process that will likely see China is likely to remain Apple's most important manufacturing base for the foreseeable future.

"It's really a long-term effort and might see some results two or three years from now," the supplier said.

News of Apple's plans come just weeks after Foxconn said that it has enough capacity outside China to make enough iPhones for the US market if required.

It also follows the announcement from Google's Nest division and Nintendo that their products will no longer be produced in China. Instead, production will be shifted to Thailand and Vietnam. µ