According to anonymous sources from the Nikkei Asian Review, Apple is asking its key suppliers to assess the cost of moving about 15% to 30% of production capacity out of China to Southeast Asia, to prepare for a basic restructuring of its supply chain.
While there is much speculation that the California tech giant's demand stems from the escalating trade tension between the US and China, many Nikkei sources believe that Apple sees the risk of Severe dependence on production in China is too big and too dangerous.
A source close to the incident said: "Low birth rates, high labor costs and the risk of over-concentrating their production on a country. These important factors are becoming more and more obvious. Whether or not there is a $ 300 billion tariff, Apple will follow a diversified manufacturing trend. "
According to the company's website, about 5 million Chinese workers are relying on Apple's presence in the country, including more than 1.8 million software developers and iOS applications. Apple itself is employing about 10,000 employees in China.
Many sources said that Apple suppliers, including, manufacturers of Foxconn, Pegatron, Wistron, manufacturer MacBook Quanta Computer, iPad maker, Compal Electronics, and manufacturer AirPods Inventeec, Luxshare- ICT and Goertek, are required to seek alternatives other than China.
The number of Apple suppliers in China is still more than the US.
According to sources from Nikkei, countries considered include Mexico, India, Vietnam, Indonesia and Malaysia. In which India and Vietnam are the preferred destinations to diversify smartphone production.
Currently Apple has not set a deadline for suppliers to complete their reviews. But both sides are working together to identify the best deals and assess business environments outside of China. A source said, some suppliers have spent "3 to 5 months to evaluate a place."
One executive said, it will take at least 18 months to start production after selecting the location. "The production line for Apple products is very complex, and when production begins, there will be only a small amount of products created for testing."
In early June, Foxconn, Apple's main assembler, said it was ready to help Apple move production wherever required. The main supplier of the iPhone metal frame, Catcher Technology, also acknowledges that it is evaluating the possibilities of building a new factory outside China, due to the unpredictable impact of the commercial war.
Refer to Nikkei Asian Review