Thursday, 20 June 2019 11:44

Apple explores shifting some production out of China: report Featured

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Apple explores shifting some production out of China: report Pixabay

Apple is thinking of making substantive changes in its supply chain and has asked its major suppliers to analyse the costs that would be involved in moving between 15% and 30% of production from China to countries like India, Vietnam, Mexico, Indonesia and Malaysia.

India and Vietnam were the most favoured for the manufacture of components used in Apple iPhones, the Nikkei Asian Review reported citing anonymous sources.

The evaluation has been driven by the ongoing US-China trade war but indications are that the shift might take place even if a deal was hammered out between Beijing and Washington.

One executive was quoted as saying: "A lower birthrate, higher labour costs and the risk of overly centralising its production in one country. These adverse factors are not going anywhere.

"With or without the final round of the US$300 billion tariff, Apple is following the big trend [to diversify production]."

US President Donald Trump and his Chinese counterpart, Xi Jinping, are expected to meet at the G20 leaders' summit which is due to be held at the end of the month, but there are few indications that they will come to an agreement on ending the existing trade tensions.

Trump first imposed a 30% tariff on solar panel imports on 7 February last year, followed by a 25% tariff on all steel imports. to which Beijing retaliated on 2 April with tariffs on fruit, wine, seamless steel pipes, pork and recycled aluminium.

Since then, the tit-for-tat tariffs have been ratcheted up and as of today US$250 billion of Chinese goods have been targeted by Washington while US$110 billion of goods have been slugged with tariffs by Beijing.

About five million Chinese workers owe their jobs to Apple's operations in China, including some 1.8 million software and App developers. Apple has 10,000 workers in China.

Among the companies that have been asked to calculate the costs of moving out are iPhone suppliers Foxconn, Pegatron, and Wistron, MacBook manufacturer Quanta Computer, iPad producer Compal Electronics, and AirPod makers Inventec, Luxshare-ICT and Goertek.

It has been estimated that it would take at least a year and a half before production can start in any new location.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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