Apple investigating move of up to 30% of production out of China
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
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.
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.
Comments
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.
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.
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.
(if Cook did not start vetting options earlier)
China really did not think this one through
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.
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.
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.
I've been lurking AI for years and your comment reminded me of this old poster who HATED Tim Cook. He would spam this on articles:
"Tim Cook put all his eggs in the China basket and now poor Timmy has egg on his face"
lol
Automation would help Apples bottom line. They can automate factories in the U.S. maybe even in northern California but this will hurt Chinas economy and put thousands out of work.
The same morons who claim "Apple is hiring slaves" will then complain that Apple is putting thousands out of work. Unfortunately if China has a hand in pushing Apple away, it would be their fault if Apple goes this route. Remember Apple is an innovative company and can develop new technologies in automation for self-interests and profits. Tim Cook is being nice here and helping Chinas working class. Foxconn workers have beenreported to prefer manufacture for Apple above all other companies. If Cook wanted to, he would have had them out of work years ago. China needs to be careful here.
I do not know all the trade war details so I'm just expressing a scenario if China somehow retaliates against Apple.