It was reported that Apple is considering the transfer between 15% and 30% of the total production out of China to Southeast Asia, where they are to restructure their supply Main and asked its primary suppliers to estimate costs. This improvement was due to the expansion of trade between the United States and China, but multiple sources say that even if the disagreement was resolved, there would be no turning back. Apple decided that the risks of relying heavily on manufacturing in China, as it has done for decades, very large and even rising.
China said it will open customs tariffs by 25% on US goods, in response to the president’s plan to Donald Trump to increase tariffs on products imported from China, analysts have predicted that the cost of iPhone by up to 14% as a result, despite the fact that Tim Cook the CEO of the company said he “did not foresee that”.
States that are considered to transfer the production to include the states of South-East Asia including Vietnam, Indonesia, Malaysia in addition to India and Mexico, with India and Vietnam preferred to transfer its smart phone business to them, as noted in the report.
The company requested from its suppliers and partners, including Foxconn, Pegatron, Western Union and others provide options outside of China, and has formed a ‘study group capital expenditure’ consists of more than 30 people to discuss production plans with suppliers and negotiate with governments on financial incentives to move manufacturing of its products to their countries, as well as the regulations and the local business environment.
Suppliers depend that the transfer of the manufacturing to another place will take some time, and is likely to remain China’s most important manufacturing base of Apple in the foreseeable future, which is expected to take the start of production in the new states of at least 18 months after site selection.
Source: Nikkei Asia