Accelerating Plans

Apple is speeding up plans to move a portion of its production outside of China, which has long had a dominant position in the supply chain that helped create the most valuable corporation in the world. In an effort to lessen reliance on Foxconn-led Taiwanese assemblers, it is instructing suppliers to aggressively plan for building Apple products elsewhere in Asia, particularly in India and Vietnam.

  • Apple's shift was aided by unrest at a location known as iPhone City. Up to 300,000 people work at a Foxconn facility in the enormous city-within-a-city of Zhengzhou, China, producing iPhones and other Apple products
  • According to analysts and individuals in the Apple supply chain, the turmoil, which follows a year of events that diminished China's standing as a reliable manufacturing hub, means Apple no longer feels safe having so much of its business tied up in one area

Move 30% Out Of China

The news was announced roughly two years after rumors that Apple was considering producing iPads in Vietnam also surfaced. Apple is taking this action in an effort to shift up to 30% of its manufacturing operations outside of China.

  • Moving to India may provide some challenges, according to CNBC as India may face a shortage of workers with relevant expertise
  • Still, according to Gene Munster at Loup Ventures, 35% of iPhones will likely be produced in India in five years. “I think Apple will add iPhone production to other countries outside of India and China in the next five years.”

In the meantime, Nikkei Asia reported in August that Apple was considering for the first time moving manufacturing of its MacBooks and smartwatches to Vietnam. That article claimed that Luxshare, an Apple supplier, had already begun trial production of the gadgets in the nation.

Disclaimer

Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products.

Credits

Photo by Jimmy Liao.