Apple tells suppliers to plan for shift of manufacturing out of China

Posted:
in iPhone edited December 2022
Apple is working to speed up its shift of part of its supply chain out of China, with supply chain partners warned to plan for increases in assembly in India and Vietnam.

A Foxconn facility
A Foxconn facility


China is Apple's choice for production when it comes to many of its major products, but over the years, it has reconsidered relying on the country so much. While it has long planned to start to spread its production into other territories, it seems that Apple is becoming more proactive about its intentions.

In a Saturday report by the Wall Street Journal, Apple has "accelerated plans" to migrate some of its production elsewhere, according to sources involved in discussions. It is now reportedly informing suppliers to "plan more actively" for assembly elsewhere in Asia, especially India and Vietnam.

The messaging also apparently includes mention of reduced dependency on Foxconn Technology Group companies.

Buffeted by lockdowns led by zero-COVID government policies, as well as riots that have occurred at Foxconn's troubled Zhengzhou factory, the biggest maker of Pro-model iPhone, Apple has more of a need to migrate away. The sentiment has been there for quite some time, but with China's image as a manufacturing hub weakening in recent years, such as with the US-China trade wars, Apple wants to try to work in other areas.

Doing so is a difficult prospect, one that in September was reckoned to take eight years to shift as little as ten percent of production out of China. It does already have production centers being expanded in Vietnam and India, but there's a lot more that needs to be in place for bigger shifts to be more effective.

One element is New Product Introduction, a process where Apple teams work with contractors on making product blueprints and prototypes into a full manufacturing plan. For China, with a dense concentration of suppliers and production engineers available, NPI is easy for Apple.

To build up in other countries, Apple has to expand the NPI process to them. However, with hiring slowdowns and a slowing global economy, it's harder for Apple to allocate workers to deal with NPI with new suppliers in new countries, sources claim.

Apple does have a long-term goal of shipping 40% to 45% of its iPhones from India, up from a current level in the single digits. Meanwhile, Vietnam is expected to take on more production of other product ranges, such as AirPods, Apple Watch, and MacBook models.

Read on AppleInsider
«1

Comments

  • Reply 1 of 30
    jdwjdw Posts: 1,164member
    Very good news!
    tmayCluntBaby92racerhomie3blastdoorseanj
  • Reply 2 of 30
    JP234JP234 Posts: 789member
    Sounds like a proactive move to secure supply before China invades Taiwan.
    CluntBaby92blastdoor
  • Reply 3 of 30
    About time - I've been writing Apple for some time that they needed to get out of China except for domestic consumption devices.

    I've sold my Apple stock and am waiting for the wave of negativity to pass before jumping back in over having insufficient Pro units for the Christmas season; I expect lost Pro sales and a drop in ASP for iPhone units this quarter from folks desperate to keep from having to wrap IOUs and place them under the tree, resulting in lower quarterly earnings even if Foxconn can get their staffing house in order.

    I do wish that Apple had other manufacturing options though - like production facilities in non-BRICS countries which aren't sitting next to we own the South China Sea China.

    I'd accept higher labor costs with greater automation in just about any free world country.
    blastdoorseanj
  • Reply 4 of 30
    entropysentropys Posts: 3,793member
    It is probably about time Apple accepted a tad lower margin in order to produce in countries that aren’t fascist.
    CluntBaby92blastdoorh2pseanj
  • Reply 5 of 30
    entropys said:
    It is probably about time Apple accepted a tad lower margin in order to produce in countries that aren’t fascist.
    They are not Fascist, they are Communist. Fascism is Right-Wing and Communism is Left Wing. The two are polar opposites.
    waveparticleracerhomie3macxpressurahara
  • Reply 6 of 30
    JP234 said:
    Sounds like a proactive move to secure supply before China invades Taiwan.
    China will not invade Taiwan.

    China may attempt to invade Taiwan, but that attempt will go far less well than Ruzzia is doing in Ukraine.  China is no less corrupt, and Taiwan has a very competent military and defense assurances from the US.  Any attempted invasion would be very, very stupid on China's part, and the biggest result would be the loss of hundreds of thousands of PLA soldiers.
  • Reply 7 of 30
    entropys said:
    It is probably about time Apple accepted a tad lower margin in order to produce in countries that aren’t fascist.
    They are not Fascist, they are Communist. Fascism is Right-Wing and Communism is Left Wing. The two are polar opposites.
    China is not communist, they are fascist.  The Nazis called themselves socialist, didn't mean they were.  China has a very right-wing government.
    blastdoor
  • Reply 8 of 30
    entropys said:
    It is probably about time Apple accepted a tad lower margin in order to produce in countries that aren’t fascist.
    They are not Fascist, they are Communist. Fascism is Right-Wing and Communism is Left Wing. The two are polar opposites.
    Yes, Fascists think our culture is much better than yours. Your culture is inferior and must be banned from ours. 
  • Reply 9 of 30
    China very clearly facist, as well as Russia. 
    Monopolies state controlled. Rule of law non existent. 
    h2p
  • Reply 10 of 30
    cg27cg27 Posts: 188member
    This is not a proactive move, rather it’s reactive, and as I’ve been saying for years, even without the threat of China invading Taiwan, and/or nationalizing the Foxconn facilities on the mainland, why on earth would any company stake all of their eggs on one country for manufacturing essentially all of its products?

    Never made sense to have that much risk.  Plus having a major presence in other countries helps with sales and other intangibles such as goodwill, especially in a vast market such as India as it slowly evolves from third world status.

    As for Vietnam, Apple should be careful since they are communist and could one day make drastic demands after Apple has invested greatly there.

    Apple will be in much better shape when they have at least two independent production chain sources for each major product line.  A bit less efficient but much more secure.
    blastdoorh2p
  • Reply 11 of 30
    radarthekatradarthekat Posts: 3,576moderator
    cg27 said:
    This is not a proactive move, rather it’s reactive, and as I’ve been saying for years, even without the threat of China invading Taiwan, and/or nationalizing the Foxconn facilities on the mainland, why on earth would any company stake all of their eggs on one country for manufacturing essentially all of its products?

    Never made sense to have that much risk.  Plus having a major presence in other countries helps with sales and other intangibles such as goodwill, especially in a vast market such as India as it slowly evolves from third world status.

    As for Vietnam, Apple should be careful since they are communist and could one day make drastic demands after Apple has invested greatly there.

    Apple will be in much better shape when they have at least two independent production chain sources for each major product line.  A bit less efficient but much more secure.
    Vietnam is a very pragmatic and progressive communist country.  Seems like Apple will be better off placing bets there than staying in China.  
    blastdoor
  • Reply 12 of 30
    Great news! More in India and Thailand. And why not move back more production to USA?
  • Reply 13 of 30
    macxpressmacxpress Posts: 5,457member
    Great news! More in India and Thailand. And why not move back more production to USA?
    Because it's super expensive to move to the US? And we also don't have the capacity to produce the amount of phones Apple needs. Mass manufacturing in the US just sucks. Yes, Apple could invest in that but it would take years to get going and there's no guarantee of a positive outcome. 
    edited December 2022 waveparticleh2pradarthekaturahara
  • Reply 14 of 30
    blastdoorblastdoor Posts: 2,918member
    entropys said:
    It is probably about time Apple accepted a tad lower margin in order to produce in countries that aren’t fascist.
    Agreed, though India is looking a lot like a Hindu fascist state.

    I hope apple eventually moves some production to Mexico. Chips made in US and devices manufactured in Mexico for the North American market. Maybe chips from Ireland or Germany with assembly in Poland or Ukraine for the EU. 
    h2p
  • Reply 15 of 30
    blastdoorblastdoor Posts: 2,918member
    I wonder if apple will freeze form factors for a while, with most innovations happening at the level of silicon and software. Maybe that will make it easier to make the move?
    radarthekat
  • Reply 16 of 30
    DAalsethDAalseth Posts: 2,582member
    entropys said:
    It is probably about time Apple accepted a tad lower margin in order to produce in countries that aren’t fascist.
    They are not Fascist, they are Communist. Fascism is Right-Wing and Communism is Left Wing. The two are polar opposites.
    A history professor explained it to me like this years ago. Way back the king sat in the middle and his advisors were on both sides, conservatives on the right and liberal thinkers on the left. The more extreme the advisers were, the further to the right and left they sat. The thing was, it was a round room so the most extreme of each were mixed together on the far side. He finished by saying that, “The extreme right and extreme left of the political spectrum may carry different signs, but they are indistinguishable in rhetoric, and behaviour.” Russia - Fascist, China - Communist, these labels really don’t mean anything any more. The labels are really irrelevant. They are both engaged in committing similar atrocities. That’s what’s important.
    elijahgmuthuk_vanalingamJaiOh81h2pseanjradarthekaturahara
  • Reply 17 of 30
    How about building manufacturing facilities in Mexico, Central and South America?   This is in our hemisphere and logistics are easier! 
    blastdoor9secondkox2
  • Reply 18 of 30
    All the talks here makes no sense to business. 
    h2p9secondkox2
  • Reply 19 of 30
    entropys said:
    It is probably about time Apple accepted a tad lower margin in order to produce in countries that aren’t fascist.
    They are not Fascist, they are Communist. Fascism is Right-Wing and Communism is Left Wing. The two are polar opposites.
    Communism and socialism are economic theories regarding wealth distribution. Their polar opposite is capitalism, not fascism. You can have a socialist country that is democratic or autocratic just as you can have a capitalist country be democratic or autocratic. 
    elijahgthtradarthekaturahara
  • Reply 20 of 30
    JP234JP234 Posts: 789member
    darkvader said:
    JP234 said:
    Sounds like a proactive move to secure supply before China invades Taiwan.
    China will not invade Taiwan.

    China may attempt to invade Taiwan, but that attempt will go far less well than Ruzzia is doing in Ukraine.  China is no less corrupt, and Taiwan has a very competent military and defense assurances from the US.  Any attempted invasion would be very, very stupid on China's part, and the biggest result would be the loss of hundreds of thousands of PLA soldiers.
    That would depend on the method of attack. China can force Taiwan to surrender in the same way America forced the surrender of Japan. And it wouldn't take two. One will do the trick. And the world will issue a strong condemnation and do nothing.
    JaiOh81h2p9secondkox2
Sign In or Register to comment.