Apple investigating move of up to 30% of production out of China

Posted:
in General Discussion edited June 19
A special team within Apple has been tasked with investigating the costs of moving between 15% and 30% of iPhone, iPad and AirPod to other countries in order to reduce the impact of US/China tariffs.

Possible future Chinese sanctions could force Apple to raise US prices
Possible future Chinese sanctions could force Apple to raise US prices


A team of between 30 and 40 people at Apple is surveying the company's major suppliers about the cost implications of moving production out of China. Nikkei reports that several major suppliers have confirmed that Apple has asked them to look into moving and restructuring production.

It's claimed that 90% of all Apple products are assembled in China. The team, which was formed at the end of 2018, is specifically talking to the suppliers assembling iPhones, iPads, AirPods, and MacBooks. Specific suppliers include Compal, Goertek, Foxconn, Inventec, Luxshare, Pegatron, Quanta, and Wistron.

The publication also says that Apple has a "sense of crisis" over the U.S.-China trade dispute. It claims that Apple is particularly concerned about what sanctions China could impose and how that could force the company to raise prices in the U.S.

However, the same sources are also saying that Apple is demanding a high level of quality and that this means that "at least a year and a half is necessary" to make any move.

Apple's team is reportedly also negotiating with local governments about securing preferential terms for those suppliers. According to Nikkei sources, the team is negotiating, or plans to negotiate, business terms with governments in Mexico, India, Vietnam, Indonesia and Malaysia.

News of Apple's team comes shortly after Foxconn announced that it would be able to move iPhone production away from China, should Apple ever ask it to.

Another iPad and MacBook supplier, Pegatron, has previously been reported to have moved at least some production to Indonesia.
«13

Comments

  • Reply 1 of 46
    k2kwk2kw Posts: 1,767member
    Trump should have imposed these Tariffs two years ago.
    racerhomie3donjuanSpamSandwichairnerdmonstrosity
  • Reply 2 of 46
    sirozhasirozha Posts: 577member
    You were forewarned, Mr. Cook, by President Elect in a private meeting at the end of 2016. Why did you wait for 2 years to form such a committee? By now, you would have been ready to move production out of China, logistics genius. 
    libertyandfreered oakchemengin1donjuanmonstrosity
  • Reply 3 of 46
    GeorgeBMacGeorgeBMac Posts: 4,961member
    The ramifications of trade wars are just beginning to appear:   Apple moving production to less efficient / less reliable sources while China is doing the same by moving away from the U.S. and embracing other, more reliable entities.

    The potential winner of these things is in no way clear or obvious.
    The loser:   US!  We pay!

    The whole U.S. trade war philosophy is based on the assumption that the U.S. is irreplaceable in the world market -- that the U.S. is the center of the world.  unfortunately, that is no more true than the belief that the earth is the center of the solar system.  

    The truth is:  The U.S. comprises less than a third of the world's GDP and is very replaceable by the other 2/3's. 
    We maintain our strength by being the best -- not by being a bully.   The world won't fight us.   It will just smile and move on.
    edited June 19 radarthekatUrbaneLegendmuthuk_vanalingamcaladanianmacplusplustannertannertannerFileMakerFellerjony0
  • Reply 4 of 46
    mytdavemytdave Posts: 438member
    Good! What took you so long? And in addition to governments in Mexico, India, Vietnam, Indonesia and Malaysia, maybe you should negotiate with some States in the U.S. too.
    oneof52JWSCchemengin1donjuanairnerdmonstrosity
  • Reply 5 of 46
    radarthekatradarthekat Posts: 3,117moderator
    It’s highly unlikely this is a conversation that’s just coming to the fore within Apple.  A lot of groundwork has likely been done since 2016.  Just no need to move until now.  
    leavingthebiggracerhomie3JWSCWgkruegerFileMakerFellerapplesnorangeszoetmb
  • Reply 6 of 46
    dewmedewme Posts: 2,125member
    The so-called trade war between the US and China is a proxy war for a larger social, economic, and political struggle between the US and China. Playing games with moving manufacturing from one economically exploitable source to another economically exploitable source will do nothing to improve the job prospects of US workers aspiring to attain middle class living standards. However it will ensure a steady source for inexpensive consumer goods, keep shareholders happy, and allow those who are currently thriving to continue to do so. Finally, none of this addresses the greatest threat to jobs worldwide - automation.
    GeorgeBMacFileMakerFellerzoetmbjony0
  • Reply 7 of 46
    The ramifications of trade wars are just beginning to appear:   Apple moving production to less efficient / less reliable sources while China is doing the same by moving away from the U.S. and embracing other, more reliable entities.

    The potential winner of these things is in no way clear or obvious.
    The loser:   US!  We pay!

    The whole U.S. trade war philosophy is based on the assumption that the U.S. is irreplaceable in the world market -- that the U.S. is the center of the world.  unfortunately, that is no more true than the belief that the earth is the center of the solar system.  

    The truth is:  The U.S. comprises less than a third of the world's GDP and is very replaceable by the other 2/3's. 
    We maintain our strength by being the best -- not by being a bully.   The world won't fight us.   It will just smile and move on.
    This is one of the most ignorant rants I have ever read.  You obviously do not know much about trade, business or economics.  

    China is way out of line and doing in terms of unfair trade. They are involved in many illegal and unethical activities and you think it’s fine to keep them unaccountable?  You do realize they are still a communist (Marxist) political country that represses their people.   Their economy may have embraced a lot of capitalistic ideas, and that’s why they have prospered, but they are not the worlds friend and will not be until their evil political system is thrown out.  
    red oakdonjuanjdwairnerdmonstrositylostkiwi
  • Reply 8 of 46
    nhtnht Posts: 4,494member

    The truth is:  The U.S. comprises less than a third of the world's GDP and is very replaceable by the other 2/3's. 

    Lol...try maintaining your standard of living 1/3 of your income missing.  "Very replaceable"?

    The truth is when our economy takes a hit so does everyone else's in a big way.  Remove the US from the equation and the global economy would collapse for years.  It's like removing the 3rd leg from a 3 legged stool because while the US is only 24% of the Global GDP it impacts EVERYONE else.  A hard Brexit will impact a lot of countries...with the EU as one the bigger losers...and the UK is relatively small.


    edited June 19 GG1donjuancaladanianapplesnorangesjdwairnerdSolilostkiwi
  • Reply 9 of 46
    red oakred oak Posts: 674member
    sirozha said:
    You were forewarned, Mr. Cook, by President Elect in a private meeting at the end of 2016. Why did you wait for 2 years to form such a committee? By now, you would have been ready to move production out of China, logistics genius. 
    True

    (if Cook did not start vetting options earlier)
    donjuan
  • Reply 10 of 46
    nhtnht Posts: 4,494member
    dewme said:
    Playing games with moving manufacturing from one economically exploitable source to another economically exploitable source...
    Most likely Vietnam, Malaysia and Indonesia...
  • Reply 11 of 46
    red oakred oak Posts: 674member
    The cat is already out of the bag.  All US companies are now evaluating moving or diversifying out of China.  The damage has already been done, regardless of the outcome, even if a "great" deal is signed at the G20 meeting end of this month (a 2% chance IMO)

    China really did not think this one through 
    donjuanairnerd
  • Reply 12 of 46
    mike54mike54 Posts: 347member
    This was being investigated way before the tariffs, not only for Apple, but across other industries as well. Production has already moved to places like Vietnam, Bangladesh for other product categories and Apple is already testing the waters for manufacturing in India as we speak.
    The tariffs and other measures the US are conducting are an attempt to contain an inevitable rising China that will threaten the dominance of the US not only in technology, but more importantly the dominance of the US dollar which US leader's fears the most. Interesting times ahead.
  • Reply 13 of 46
    The ramifications of trade wars are just beginning to appear:   Apple moving production to less efficient / less reliable sources while China is doing the same by moving away from the U.S. and embracing other, more reliable entities.

    The potential winner of these things is in no way clear or obvious.
    The loser:   US!  We pay!

    The whole U.S. trade war philosophy is based on the assumption that the U.S. is irreplaceable in the world market -- that the U.S. is the center of the world.  unfortunately, that is no more true than the belief that the earth is the center of the solar system.  

    The truth is:  The U.S. comprises less than a third of the world's GDP and is very replaceable by the other 2/3's. 
    We maintain our strength by being the best -- not by being a bully.   The world won't fight us.   It will just smile and move on.
    An absolutely spot on take.

    The present US administration is throwing around sanctions (economic warfare) like confetti and sooner or later the US will start to get covered in the blowback. The indiscriminate use of sanctions has hurt an number of allies in the UK and Europe so where once the UK and Europe would be counted upon to be in lockstep with US policy many are asking what's the quid pro quo here?

    The Chinese genie is well and truly out of the bottle thanks to the Western neoliberals who shipped Western manufacturing jobs to China to maximise their  profits and shareholder value. The world, thanks to these profiteers, at a pivot point and the rise of China to the wealthiest nation on earth is set in stone. No amount of US protectionist sanctions will stop China becoming the dominant economic force in the world, the only question is how long with current US allies hang around especially if they're the ones getting damaged by US sanctions and unable to conduct their own free trade free from US interference.

    Ask small town America whose internet providers used a lot of Huawei infrastructure if they're better off when they're paying vastly higher internet fees because companies have to use 'approved' suppliers costing 5x times as much for less good equipment. This is a taste of what's to come especially if the trade war continues. China cutting off rare earths will be devastating to Western economies not just the US.

    Google have just had a eureka moment when they realised Huawei were much further along the path with their own OS which is going to be made Open Source and are now questioning the Huawei ban. Customers use Google because they have to not because they want to, Google is a horrible company and everyone with a braincell knows it. Google can't rely upon customer loyalty so there's every chance the Huawei OS will be a player in the market and what happens if Samsung gets on board with the OS? There could be some interesting times ahead.

    The Huawei CEO is a smart chap, he openly says the sanctions have hurt but they will alter their business model and come again. Huawei will concentrate more on new markets where they'll out compete US companies that can't be protected by sanctions and a de facto 2 speed world, the fast lane constructed by China and the slow lane with expensive for the rest.

    The US's huge nuclear stock pile and fleets of warships floating round the globe cannot be used to make consumers buy inferior products so this Trump strategy is a moment of national self harm.
    avon b7macplusplusGeorgeBMacmacky the macky
  • Reply 14 of 46
    nhtnht Posts: 4,494member
    Rare earths aren't and China became a net-importer of rare earth concentrates.  China has moved to production of finished materials (ie magnets and alloys) since it doesn't want to bear the environmental costs of increased mining.

    Infrastructure costs have little to do with small town internet fees but domination by cable companies as monopolies that fight local government infrastructure developments.

    We won the LTE race.  So what?  Our wireless networks are still comparatively slow and expensive and it has little to do with the CAPEX of the actual LTE telecom gear.


    racerhomie3
  • Reply 15 of 46
    JWSCJWSC Posts: 512member
    dewme said:
    The so-called trade war between the US and China is a proxy war for a larger social, economic, and political struggle between the US and China. Playing games with moving manufacturing from one economically exploitable source to another economically exploitable source will do nothing to improve the job prospects of US workers aspiring to attain middle class living standards. However it will ensure a steady source for inexpensive consumer goods, keep shareholders happy, and allow those who are currently thriving to continue to do so. Finally, none of this addresses the greatest threat to jobs worldwide - automation.
    Automation is the advancement of technology.  It can be seen as either a threat or an opportunity depending on your point of view.  The reality is as it has always been for thousands of years.  Without a proper education you will be shoved around by the winds of change instead of being the one who makes the wind blow.
    jony0
  • Reply 16 of 46
    JWSCJWSC Posts: 512member
    The ramifications of trade wars are just beginning to appear:   Apple moving production to less efficient / less reliable sources while China is doing the same by moving away from the U.S. and embracing other, more reliable entities.

    The potential winner of these things is in no way clear or obvious.
    The loser:   US!  We pay!

    The whole U.S. trade war philosophy is based on the assumption that the U.S. is irreplaceable in the world market -- that the U.S. is the center of the world.  unfortunately, that is no more true than the belief that the earth is the center of the solar system.  

    The truth is:  The U.S. comprises less than a third of the world's GDP and is very replaceable by the other 2/3's. 
    We maintain our strength by being the best -- not by being a bully.   The world won't fight us.   It will just smile and move on.
    This is one of the most ignorant rants I have ever read.  You obviously do not know much about trade, business or economics.  

    China is way out of line and doing in terms of unfair trade. They are involved in many illegal and unethical activities and you think it’s fine to keep them unaccountable?  You do realize they are still a communist (Marxist) political country that represses their people.   Their economy may have embraced a lot of capitalistic ideas, and that’s why they have prospered, but they are not the worlds friend and will not be until their evil political system is thrown out.  
    Not disagreeing, per se.  But China had a good set of teachers (or ‘teachable moments’ in PC pablum).  The British empire and the Opium Wars, Western colonialism and occupation, Japanese occupation, the ravages of Maoism, and finally American CEOs and their companies teaching them how to manufacture and then, ultimately, design their own high quality products.  China won’t be pushed around any more.  Can’t blame them.

    But in many ways they are still an immature nation, and prone to behaviors that today’s western norms no longer find acceptable.  Regardless of what Trump does, American CEOs should be cautious of how much they invest in China.  I would not want the entire fortune of my company to be held hostage by a regime that still hasn’t bought into the rule of law yet.

    Tim Cook must be wresting with his own values versus the behaviors of the Chinese Communist Party constantly.  How much positive influence can Apple have versus how much money and technological power is Apple handing to the Chinese regime.  It can’t be easy being Tim Cook.  Got some hard decisions to make.
    FileMakerFellerbadmonkjony0
  • Reply 17 of 46
    The ramifications of trade wars are just beginning to appear:   Apple moving production to less efficient / less reliable sources while China is doing the same by moving away from the U.S. and embracing other, more reliable entities.

    The potential winner of these things is in no way clear or obvious.
    The loser:   US!  We pay!

    The whole U.S. trade war philosophy is based on the assumption that the U.S. is irreplaceable in the world market -- that the U.S. is the center of the world.  unfortunately, that is no more true than the belief that the earth is the center of the solar system.  

    The truth is:  The U.S. comprises less than a third of the world's GDP and is very replaceable by the other 2/3's. 
    We maintain our strength by being the best -- not by being a bully.   The world won't fight us.   It will just smile and move on.
    Wait, the earth isn’t the center of the solar system? Next you’ll be telling me the earth isn’t flat. Sheesh. 
    macplusplusGeorgeBMacFileMakerFellermuthuk_vanalingam
  • Reply 18 of 46
    This has been going on for a while...
    Putting all your eggs in one basket is a bad strategy.
    donjuan
  • Reply 19 of 46
    donjuandonjuan Posts: 36member
    Winning.
    FileMakerFeller
  • Reply 20 of 46
    sflocalsflocal Posts: 4,684member
    sirozha said:
    You were forewarned, Mr. Cook, by President Elect in a private meeting at the end of 2016. Why did you wait for 2 years to form such a committee? By now, you would have been ready to move production out of China, logistics genius. 
    What are you babbling?  You have zero clues what Apple has been doing since 2016 and you're basing your rant on a headline?  

    Try again, and this time at least put some effort in it.
    AppleExposedGeorgeBMacmacky the mackyjony0
Sign In or Register to comment.