Cupertino-based technology giant Apple is reportedly planning to move around 15-30% of its hardware manufacturing out of China. According to a recent report that has surfaced online, the company has a growing team that is specifically looking at moving production. Apple has also asked its key manufacturing partners like Foxconn, Pegatron, and Wistron to evaluate the options that are available.
The report, which first surfaced on Nikkei, says that the reason behind the change is the ongoing trade war between the United States and China. We should mention that the tensions would get more intense by the end of this month when a 25% tariffs will be introduced on smartphones, laptops and tablets. But then, regardless of which way the dispute goes, Apple is reportedly certain about shifting the production.
Speaking on the matter, an Apple supplier told Nikkei, “A lower birthrate, higher labor costs and the risk of overly centralizing its production in one country. These adverse factors are not going anywhere… with or without the final round of the $300 billion tariff.”
It is worth noticing that US President Donald Trump has repeatedly mentioned that Apple was open to the idea of getting its production from China to the United States. However, it is also being speculated that the company will be shifting its production to countries in South East Asia. India and Vietnam have a very good chance of becoming the next manufacturing hub for the company.
The Cupertino-based technology giant has already been producing lower-cost iPhones in India and it has already been considering to get the production of higher models too because the tariffs on imported smartphones in the country are very high. In fact, Apple’s sales faced a major fall in the because the prices of iPhone XS, iPhone XS Max and iPhone XR are too high because of the import duty that was levied on them.
Recently, even Foxconn said that it has the capacity of moving the production of US iPhones out of China if it is required to do so. Another thing that is worth mentioning is that apart from Vietnam and India, other countries being considered for iPhone manufacturing are Mexico, Indonesia, and Malaysia.
According to an Apple supplier who spoke to Nikkei, shifting the entire ecosystem of production out of China will be a “painful and difficult process.” China has a huge workforce of skilled workers and its infrastructure is not prone to problems like power cuts. The process to move production will be a slow one and it will at least take 18 months, if not more to do it.
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