Apple will take a decade to move just some production out of China

Posted:
in General Discussion
A new report estimates that it would take Apple eight years to move even as little as ten percent of its production away from China.




Apple and all technology firms have been making moves over the last several years to reduce their dependency on China. It's partly from wanting to avoid over-reliance on any one source, but also because of specific issues regarding China and the Chinese government.

Increasing tensions between the US and China are a significant factor, but so too is how the country's extreme -- but effective -- series of COVID measures have affected Apple's suppliers.

"With China accounting for 70% of global smartphone manufacturing and leading Chinese vendors accounting for nearly half of global shipments," says the full report from Bloomberg Intelligence, "the region has a well-developed supply chain, which will be tough to replicate -- and one Apple could lose access to if it moves."

According to Bloomberg, 98% of all iPhones are made in China and the logistics of working with scores of local component suppliers is well established. The complex production chains cost US firms billions to develop, and many years to create, so replacing them would be a slow process.

Specifically, Bloomberg estimates that moving 10% of its production away from China would take Apple about eight years. There are no further details of how that timescale was estimated.

The publication does, though, say that Apple is more dependent on China than other firms. Consequently, it estimates that in a decade, the overall hardware and electronics industry could cut their reliance to between 20% and 30%.

Bloomberg does not back up its figures with sources of data regarding the shift.

As well as that estimate about the overall hardware and electronics industry -- presumably excluding Apple -- Bloomberg separately speaks of what it calls the overall technology industry. It estimates that this industry could reduce it's China dependency by up to 40% by 2030.

Summary of Apple's production across the world (Source: Bloomberg)
Summary of Apple's production across the world (Source: Bloomberg)


The report does acknowledge that Apple's largest supplier, Foxconn, is investing to build a facility in Vietnam. But the report's central conclusion is that it is going to take years for Apple to create a supply chain away from China.

Thee report seems to ignore how Apple has already managed to move MacBook Pro production to Vietnam in response to China's lockdowns.

It is true, though, that the original COVID pandemic delayed the move away from China for Apple and other technology firms. Separately, respected analyst Katy Huberty warned in 2019 that "a large-scale move out of the country would not only be costly, but could take multiple years to complete."

Separately, Bloomberg recently reported that iPhone 14 production was being cut through lower than expected demand. It was based on a claim that Apple first stepped up production, then brought it back down because of low sales.

However, its sources and conclusion were subsequently disparaged by other sources, including analyst Ming-Chi Kuo, who called the report "weird".

Read on AppleInsider

Comments

  • Reply 1 of 20
    Another story that infers insider knowledge written by an individual clearly without. Apple could disassociate from China business in very short order if it was deemed best for business.
    And Foxconn is not so much a supplier as a FATP partner. If you want to be a respected journalist, you would benefit by learning the difference.

    Oh wait. Somebody else reported this story and you simply reposted it.
    Nevermind.
  • Reply 2 of 20
    crowleycrowley Posts: 10,453member
    Another story that infers insider knowledge written by an individual clearly without. Apple could disassociate from China business in very short order if it was deemed best for business.
    And Foxconn is not so much a supplier as a FATP partner. If you want to be a respected journalist, you would benefit by learning the difference.
    Are we to infer that you have insider knowledge?
    muthuk_vanalingamFileMakerFeller
  • Reply 3 of 20
    The real question is - why is this ONLY an issue for Apple? Car companies part manufacturing, furnaces, 80% of all Walmart products...But this is an issue for Apple? If suddenly, overnight, all US manufacturing in China were to end the least important issue would be the iPhones.
    baconstangdewmeFileMakerFeller
  • Reply 4 of 20
    The real question is - why is this ONLY an issue for Apple? Car companies part manufacturing, furnaces, 80% of all Walmart products...But this is an issue for Apple? If suddenly, overnight, all US manufacturing in China were to end the least important issue would be the iPhones.
    It isn't, but this is an Apple oriented site so that is what they report on.

    crowley said:
    Another story that infers insider knowledge written by an individual clearly without. Apple could disassociate from China business in very short order if it was deemed best for business.
    And Foxconn is not so much a supplier as a FATP partner. If you want to be a respected journalist, you would benefit by learning the difference.
    Are we to infer that you have insider knowledge?
    He knows where all the fully set up, unoccupied factories around the world are, of course! (Well, there's that Foxconn plant in Wisconsin for sure!)
    muthuk_vanalingamwatto_cobra
  • Reply 5 of 20
    danoxdanox Posts: 1,324member
    Brazil, India, and Mexico are unstable when compared to China the transition is 10-20 years to move out, but who is stable among those 4 countries it isn’t the first three.
    baconstangFileMakerFellerwatto_cobra
  • Reply 6 of 20
    danox said:
    Brazil, India, and Mexico are unstable when compared to China the transition is 10-20 years to move out, but who is stable among those 4 countries it isn’t the first three.
    That's why Apple needs to relocate manufacturing to Lichtenstein!
    FileMakerFellerwatto_cobra
  • Reply 7 of 20
    DAalsethDAalseth Posts: 2,381member
    Before we get all bent out of shape, let’s remember this is Bloom(a Chinese spy-chip in every server)berg. I wouldn’t trust them with a weather report if they had an open window next to them. 
    lkruppwaveparticlewatto_cobraanantksundaram
  • Reply 8 of 20
    chadbagchadbag Posts: 1,794member
    Extreme but effective C19 response?   No one else is doing the extreme measures of China and one else is having  major C19 issues either.  
    watto_cobra
  • Reply 9 of 20
    danox said:
    Brazil, India, and Mexico are unstable when compared to China the transition is 10-20 years to move out, but who is stable among those 4 countries it isn’t the first three.
    From a citizen point of view China might (maybe) be more stable than Mexico, but from a 2-trillion dollar company point of view, Mexico might look pretty good. Apple could own a chunk of Mexico if they wanted to. 
    watto_cobra
  • Reply 10 of 20
    DAalseth said:
    Before we get all bent out of shape, let’s remember this is Bloom(a Chinese spy-chip in every server)berg. I wouldn’t trust them with a weather report if they had an open window next to them. 
    Agreed, but this looks to be an opinion piece about possible strategic moves rather than an unsubstantiated (and un-retracted) story about a supposedly factual manufacturing issue.
    edited September 30 lkruppwatto_cobra
  • Reply 11 of 20
    blastdoorblastdoor Posts: 2,822member
    This timeframe seems ballpark reasonable. It’s maybe misleading to say “just 10%” though. The first to move will be the hardest to move. Scaling production should be easier than establishing production. 
    lkruppwatto_cobramuthuk_vanalingam
  • Reply 12 of 20
    lkrupplkrupp Posts: 10,160member
    DAalseth said:
    Before we get all bent out of shape, let’s remember this is Bloom(a Chinese spy-chip in every server)berg. I wouldn’t trust them with a weather report if they had an open window next to them. 
    The money shot of this entire article...
     
    "Bloomberg does not back up its figures with sources of data regarding the shift.”



    DAalsethwatto_cobra
  • Reply 13 of 20
    lkrupplkrupp Posts: 10,160member
    A lot can happen in the next two years, let alone ten.
    watto_cobra
  • Reply 14 of 20
    DAalsethDAalseth Posts: 2,381member
    DAalseth said:
    Before we get all bent out of shape, let’s remember this is Bloom(a Chinese spy-chip in every server)berg. I wouldn’t trust them with a weather report if they had an open window next to them. 
    Agreed, but this looks to be an opinion piece about possible strategic moves rather than an unsubstantiated (and un-retracted) story about a supposedly factual manufacturing issue.
    If they can’t get the factual articles right, I have no reason to trust their opinions.
    watto_cobra
  • Reply 15 of 20
    The truth is Apple is not moving production out of China.
  • Reply 16 of 20
    Well, if they don't start now, it'll take more than a decade...
  • Reply 17 of 20
    danox said:
    Brazil, India, and Mexico are unstable when compared to China the transition is 10-20 years to move out, but who is stable among those 4 countries it isn’t the first three.
    This takes the cake for the most clueless post of the year. (Granted, there's still a few months left, but I'll risk it). 
  • Reply 18 of 20
    danoxdanox Posts: 1,324member
    blastdoor said:
    danox said:
    Brazil, India, and Mexico are unstable when compared to China the transition is 10-20 years to move out, but who is stable among those 4 countries it isn’t the first three.
    From a citizen point of view China might (maybe) be more stable than Mexico, but from a 2-trillion dollar company point of view, Mexico might look pretty good. Apple could own a chunk of Mexico if they wanted to. 
    Mexico is now divided up among six drug cartels with end in sight.
  • Reply 19 of 20
    danoxdanox Posts: 1,324member
    danox said:
    Brazil, India, and Mexico are unstable when compared to China the transition is 10-20 years to move out, but who is stable among those 4 countries it isn’t the first three.
    This takes the cake for the most clueless post of the year. (Granted, there's still a few months left, but I'll risk it). 
    Foxconn will build a few iPhones for the Indian market like Brazil nothing more. Hopefully they stay away from the Bangladesh side, because 200 million climate refugees will be coming soon.
  • Reply 20 of 20
    blastdoor said:
    danox said:
    Brazil, India, and Mexico are unstable when compared to China the transition is 10-20 years to move out, but who is stable among those 4 countries it isn’t the first three.
    From a citizen point of view China might (maybe) be more stable than Mexico, but from a 2-trillion dollar company point of view, Mexico might look pretty good. Apple could own a chunk of Mexico if they wanted to. 
    Apple may not know this news that MSM tried to downplay it. Google News does not list it.
    https://www.theguardian.com/world/2022/oct/06/mexico-mayor-among-18-killed-in-town-hall-massacre
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