Apple explores handling of 15% to 30% of China's production capacity – Nikkei


(June 19): Apple has asked its main suppliers to assess the cost implications of transferring from 15% to 30% of its production capacity from China to Southeast Asia as it prepares to restructure its supply chain . Nikkei Asian Review report on Wednesday.

Apple's claim was a result of Sino-US's extended trade dispute, but a trade settlement will not lead to a change in the company's decision, Nikkei he said, citing several sources.

The iPhone maker has decided that the risks of relying heavily on manufacturing in China are too great and even growing.

Earlier this month, credit rating agency Fitch said it sees Apple, Dell Technologies and HP as potential blacklisting candidates if China blacklists US companies in retaliation for restrictions on Huawei.

The top iPhone car makers: Foxconn, Pegatron, Wistron, MacQuanta Computer, Compan Electronics and iPad, Luxshare-ICT and Goertek, were evaluated outside China. Nikkei reported.

The countries considered include Mexico, India, Vietnam, Indonesia and Malaysia. India and Vietnam are among the favorites for smartphones, Nikkei said citing sources who did not want to be identified as the discussions are private.

Last week, Foxconn said it had enough capacity outside China to meet Apple's demand on the US market if the company needed to adjust its production lines, as US President Donald Trump threatened to impose an additional $ 300 billion in Chinese products.

Analysts at Wedbush Securities said that at best, Apple could move 5 to 7 percent of its iPhone production to India in the next 12 to 18 months.

Given the complexity and logistics involved, the brokerage said it would take at least 2 to 3 years to transfer 15% of China's iPhones production to other regions.

"We believe this is all about a poker game and Apple will not diversify China's production overnight and certainly a long-term US-China agreement is critical for Cook to sleep well at night," said Wedbush analysts .

China is a key market for Apple as well as an important hub for the production of its devices. The company earned nearly 18% of its total revenue from Greater China in the three months to March.

In early June, Trump met with Apple CEO Tim Cook to discuss business issues and other issues faced by the technology company while Trump deliberates whether he will meet his threat to raise China's tariffs.

A group of more than 30 people from Apple's capital expenditure study team have been negotiating production plans with suppliers and governments over monetary incentives that could be offered to lure Apple's manufacturing, the report said.

A deadline has not yet been set for suppliers to finalize their business proposals, Nikkei said, adding that it would take at least 18 months to start production after choosing a location.

Apple and Foxconn did not respond to Reuters request for comment on the report.


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