Apple plans to expand production bases outside of China
With over 2 billion iPhones sold worldwide, companies such as
Apple Looks to Boost Production Outside China --WSJ
https://www.wsj.com/articles/apple-looks-to-boost-production-outside-china-11653142077
Report: Apple tells suppliers it wants to expand manufacturing outside of China, India and Vietnam likely future production hubs ―― 9to5Mac
https://9to5mac.com/2022/05/21/report-apple-suppliers-to-expand-manufacturing-outside-of-china/
Apple produces some of its products in Vietnam and India, but most of the others in EMS manufacturers' factories such as Foxconn and Pegatron in China. According to analysts, more than 90% of Apple products such as iPhone, iPad and MacBook are manufactured in China by external EMS.
According to The Wall Street Journal, Apple has been considering expanding production bases outside of China for some time, but the pandemic of the new coronavirus has forced the plan to be temporarily suspended. It seems that he was in a situation where he did not. However, it has been pointed out that Apple has reaffirmed the need to diversify its production bases due to the strict lockdown measures by the pandemic of the new coronavirus that has occurred in Shanghai, China since the beginning of 2022. increase.
The Wall Street Journal reports that Apple has informed some contracted EMS makers that they 'want to increase production capacity outside of China,' as testimony from stakeholders. In addition to this, the Wall Street Journal said, 'If Apple, which has the highest market capitalization in the United States, moves to expand production bases outside China, it will consider reducing the dependence of production bases and main materials on China. It may affect other Western companies that are doing so. '
It has also been pointed out that one of the major factors behind Apple's expansion of production bases outside of China is the 'trade war between the United States and China.'
Lockdown measures by the pandemic of the new coronavirus in China are affecting not only Apple but also various companies. Apple predicts that the re-emergence of the new coronavirus in China could affect sales of up to $ 8 billion this quarter (March-June). In addition, travel restrictions imposed by China and a major power outage in 2021 have also resulted in a loss of confidence in China, the Wall Street Journal reports.
The Wall Street Journal cites 'Apple products are in great demand in the Chinese market' as one of the reasons why Apple has a production base in China. In fact, China accounts for about 20% of Apple's sales, revealing that the iPhone is the most popular smartphone in the Chinese market. If we can sell products produced in China in China, we can save on the cost of importing and exporting products, so we can expect more profits.
Apple has returned to No. 1 in China's smartphone market share, and what is the ranking of Huawei and Xiaomi? --GIGAZINE
However, the Wall Street Journal points out that China is the only factory and supply chain that has sufficient production capacity to meet Apple's huge ordering requirements. It is predicted that the shift of production bases to alternative production hubs such as India and Vietnam will be gradual, as it is difficult to find cheap and capable labor in countries other than China. In the case of Apple, 9to5Mac points out that the production base of new products (AR headset etc.) that will appear in the future may be land other than China.
'Apple sees India as the most promising candidate because of its large population and low labor costs,' said a source who talked with Apple about plans to expand production bases outside of China. The Taiwanese EMS Foxconn and Wistron already have production plants in India, producing iPhones for sale in India.
Foxconn, which manufactures iPhone, announces that it will start manufacturing iPhone in India-GIGAZINE
Apple plans to produce export products in India as well, and seems to be discussing this possibility with EMS makers. However, it seems that there is a problem that it is difficult for EMS makers based in China to expand their business in India because the relationship with China is cold in India.
As a result, China-based EMS manufacturers see Southeast Asian countries, including Vietnam, as candidates for 'non-China production bases,' sources said. In Vietnam, AirPods are already in production at the time of writing the article.
It has also been pointed out that Apple may develop production bases other than China into full-scale production bases, and analysts and suppliers said, 'Such a step requires a large investment by the supplier. With soaring commodity prices, the war in Ukraine, and the instability of the global economy due to stock market volatility, suppliers should be very worried. '
However, if Apple's suppliers want to keep their current business, 'there's no choice but to keep up with Apple,' said a contractor executive.
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in Mobile, Posted by logu_ii