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Apple reportedly shifting up to 30% of production out of China

By Cookie Monster - on 20 Jun 2019, 12:00am

Apple reportedly shifting up to 30% of production out of China

Apple is said to be preparing for a fundamental restructuring of its supply chain according to sources of Nikkei Asian Review. 

The Cupertino-based company is reportedly shifting 15% to 30% of its production capacity out of China. The list of potential countries include Mexico, India, Vietnam, Indonesia and Malaysia. The decision is reportedly triggered by ongoing trade tensions between the U.S and China, and Apple’s plan to diversify its supply chain. 

“A lower birthrate, higher labor costs and the risk of overly centralizing its production in one country. These adverse factors are not going anywhere," said one executive with knowledge of the situation. "With or without the final round of the $300 billion tariff, Apple is following the big trend [to diversify production]," giving itself more flexibility, the person added.

The planning started towards the end of last year when Apple began expanding its capital expense studies team. The team is discussing production plans with suppliers and negotiating with governments over potential  financial incentives, regulations and local business environment if Apple shifts some production to their countries. 

The restructuring of the supply chain is expected to take a long time and some results could only emerge two to three years from now. Sources added that it could take up to 18 months to start production after choosing a location. 

Pegatron, which is a huge Apple supplier, will invest up to $1 billion to assemble iPhone chips in Indonesia. Foxconn, the biggest assembler of iPhones, is ready to expand manufacturing of newer models in India sometime this year.

Source: Nikkei Asian Review

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