Apple tells suppliers to plan for shift of manufacturing out of China
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
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
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
Comments
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.
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.
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.
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.
Authoritarian capitalism
https://en.wikipedia.org/wiki/Authoritarian_capitalism
"Authoritarian capitalism, or illiberal capitalism, is an economic system in which a capitalist market economy exists alongside an authoritarian government. Related to and overlapping with state capitalism, a system in which the state undertakes commercial activity, authoritarian capitalism combines private property and the functioning of market forces with repression of dissent, restrictions on freedom of speech and either a lack of elections or an electoral system with a single dominant political party.
Countries commonly referred to as being authoritarian capitalist states include China since the economic reforms, Hungary under Viktor Orbán, Russia under Vladimir Putin, as well as fascist regimes and military dictatorships during the Cold War. Nazi Germany has also been described as authoritarian capitalist, especially for its privatization policy in the 1930s."