Apple accelerates withdrawal from China
Apple Inc.'s massive exposure to the Chinese manufacturing sector has caused shortages in iPhone production as the implementation of covid-zero policies has hit production at local giant Foxconn hard. A new report shows that the Apple company's flight from China is accelerating.
According to the WSJ, Apple "is telling suppliers to more actively plan to assemble Apple products elsewhere in Asia, particularly in India and Vietnam, and is seeking to reduce reliance on Taiwanese assemblers led by Foxconn."
Apple's supply chain data indicates that China is the main headquarters of the iPhone maker. Market research firm Counterpoint Research recently found that 85 percent of the Pro line of iPhones are manufactured at Foxconn's giant factory, a city within a city, in Zhengzhou.
The large factory has been hit by restrictions and unrest in recent weeks and months, leading to a production shortfall of 6 million iPhone Pros by the end of the year. “According to Apple analysts and supply chain insiders, Apple no longer feels comfortable having so much business tied up in one place,” the WSJ said. “In the past, no attention was paid to the risks of production concentration. Free trade was the norm and things were very predictable. We have now entered a new world,” said Alan Yeung, a former US executive at Foxconn.
People familiar with Apple's supply chain have said that not all production will be moved out of China. However, the remaining production in China will draw on a larger group of assemblers, not just Foxconn. Luxshare Precision Industry Co. and Wingtech Technology Co. are the two companies likely to receive the new production orders.
As for the move from China, those involved in the discussions said Apple is telling manufacturing partners to look to other countries, but the change won't happen any time soon also because logistical ties with Beijing are tight. "Finding all the pieces to build the scale Apple needs isn't easy," said Kate Whitehead, a former Apple operations manager who now owns her own supply chain consultancy.
Ming-chi Kuo, an analyst at TF International Securities who follows the supply chain, said Apple's long-term goal is to ship 40-45% of iPhones from India. Suppliers said Vietnam could soon become a significant player in the production of other Apple products such as AirPods, smartwatches and laptops.
The biggest trend is the fragmentation of the global supply chain. US companies realize China's zero Covid policy and closures, coupled with heightened geopolitical risk across the region, are bad for business and recently the American Chamber of Commerce in Shanghai's latest survey of US companies in China it found an almost doubling of respondents in the last year who are reducing investments.
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The article Apple accelerates its withdrawal from China comes from Scenarios Economics .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-apple-accelera-la-ritirata-dalla-cina/ on Sun, 04 Dec 2022 13:56:38 +0000.