Vietnam, India could replace China as Apple’s manufacturing hub – in the long run
US tech giant Apple has told its suppliers that it wants to expand contract manufacturing outside of China and is looking at Vietnam and India as potential new production hubs.
The consideration is mainly a result of supply chain problems arising from Beijing’s strict anti-Covid-19 policy and the related extended lockdowns, among other issues, The Wall Street Journal reported.
Apple’s heavy dependence on China is also seen as a potential risk for the company because of the unpredictable behaviour of Beijing’s authoritarian government and its ongoing political clashes with the US leadership, the report cited analysts.
Currently, more than 90 per cent of Apple products such as iPhones, iPads, MacBook laptops, electronic gadgets and accessories are manufactured in China by contractors such as Foxconn, Pegatron, Wistron, Goertek and Luxshare, but Vietnam and India have grown their output in the recent past, the report said.
Strict lockdowns in China clogging supply chains
Apple has been considering geographic expansion plans for a while, but the pandemic put a pause to any immediate changes. However, the recent bout of strict lockdowns in Shanghai has reaffirmed the need to diversify, it added.
Furthermore, Apple’s consideration to relocate parts of its production has mounted this year after Beijing refrained from criticising Russia for its invasion of Ukraine.
Any move by Apple to shift production from China could be a pattern for other Western companies which are also considering reducing dependence on China for manufacturing or key materials, the report noted.
Hard to compete with China
However, analysts have remarked that it is still hard for any other country to compete with China as an electronics production hub, as currently only Chinese facilities are big enough to meet Apple’s huge order requirements.
Also, finding cheap, qualified labour elsewhere remains difficult so that the transition to alternative production hubs such as Vietnam or India would likely be slow and gradual. For Apple, this means that predominantly the production of new products would be based outside of China in the beginning.
[caption id="attachment_38479" align="alignleft" width="300"] Foxconn is Apple's largest contract manufacturer[/caption] US tech giant Apple has told its suppliers that it wants to expand contract manufacturing outside of China and is looking at Vietnam and India as potential new production hubs. The consideration is mainly a result of supply chain problems arising from Beijing’s strict anti-Covid-19 policy and the related extended lockdowns, among other issues, The Wall Street Journal reported. Apple’s heavy dependence on China is also seen as a potential risk for the company because of the unpredictable behaviour of Beijing’s authoritarian government and its ongoing political clashes with the...
US tech giant Apple has told its suppliers that it wants to expand contract manufacturing outside of China and is looking at Vietnam and India as potential new production hubs.
The consideration is mainly a result of supply chain problems arising from Beijing’s strict anti-Covid-19 policy and the related extended lockdowns, among other issues, The Wall Street Journal reported.
Apple’s heavy dependence on China is also seen as a potential risk for the company because of the unpredictable behaviour of Beijing’s authoritarian government and its ongoing political clashes with the US leadership, the report cited analysts.
Currently, more than 90 per cent of Apple products such as iPhones, iPads, MacBook laptops, electronic gadgets and accessories are manufactured in China by contractors such as Foxconn, Pegatron, Wistron, Goertek and Luxshare, but Vietnam and India have grown their output in the recent past, the report said.
Strict lockdowns in China clogging supply chains
Apple has been considering geographic expansion plans for a while, but the pandemic put a pause to any immediate changes. However, the recent bout of strict lockdowns in Shanghai has reaffirmed the need to diversify, it added.
Furthermore, Apple’s consideration to relocate parts of its production has mounted this year after Beijing refrained from criticising Russia for its invasion of Ukraine.
Any move by Apple to shift production from China could be a pattern for other Western companies which are also considering reducing dependence on China for manufacturing or key materials, the report noted.
Hard to compete with China
However, analysts have remarked that it is still hard for any other country to compete with China as an electronics production hub, as currently only Chinese facilities are big enough to meet Apple’s huge order requirements.
Also, finding cheap, qualified labour elsewhere remains difficult so that the transition to alternative production hubs such as Vietnam or India would likely be slow and gradual. For Apple, this means that predominantly the production of new products would be based outside of China in the beginning.
