Apple to move 15%-30% production capacity from China to Southeast Asia

Saturday, 22 Jun, 2019

Apple has decided the risks of depending heavily on manufacturing in China are too great and even rising, it said.

Key iPhone assemblers Foxconn, Pegatron, Wistron, major MacBook maker Quanta Computer, iPad maker, Compal Electronics, and AirPods makers Inventec, Luxshare-ICT and Goertek all have been asked to evaluate options outside of China, multiple sources say.

"We urge the US government not to impose tariffs on these products", Apple said in its filing to US Trade Representative Robert Lighthizer.

Besides Malaysia, other countries that are also in consideration include our neighbouring country Indonesia, Vietnam, India, and Mexico.

The company, which assembles most of Apple's iPhones, said earlier this month that it has enough capacity outside China to produce all the devices the company sells in the U.S.

The US trade war with China is reportedly pushing Apple to restructure its production chain. The new set of tariffs would make Apple's products more expensive and give Apple's competitors an advantage. This has made Apple to create skilled workers in the course of time, which now led to around 5 MIllion Chinese jobs due to Apple and its products.

"U.S. tariffs on Apple's products would result in a reduction of Apple's US economic contribution", the letter read.

Just don't expect those Foxconn jobs to move to the US anytime soon. Other than shifting the manufacturing location, corporations would both have to lift costs on their items, which wouldn't be helpful for customers, or take up the price of the tariff, which would scale back revenue.

Another supplier said that it had also not gotten such a request from Apple and that the Cupertino, California-based company had resisted a proposed production shift to Southeast Asia.

The Trump administration began imposing tariffs of 25% on $200 billion worth of imports from China in May.

FILE PHOTO: A woman looks at the screen of her mobile phone in front of an Apple logo outside its store in Shanghai, China July 30, 2017.

The report stated that over 30 members of Apple's capital expense studies team had been discussing production plans with suppliers and governments along with monetary incentives, which could potentially attract Apple manufacturing.