Maybe China isn’t the savior of the supply chain after all.
The trade tiff between the U.S. and China is raising costs for companies that source from China while raising nationalist feelings that cut into sales. The Chinese government has called on its people to buy more Chinese goods and fewer American goods. Both trends are taking a bite out of Apple, which has decided to do something about it.
According to The Nikkei Asian Review, the company has asked major suppliers to explore moving up to 30% of the supply chain to other countries. Even when the trade dispute is settled, Apple won’t move all of its supply back to China because of several continuing negative factors.
An executive with knowledge of the situation said:
“A lower birthrate, higher labor costs and the risk of overly centralizing its production in one country. These adverse factors are not going anywhere. With or without the final round of the $300 billion tariff, Apple is following the big trend [to diversify production].”
Key iPhone assemblers Foxconn, Pegatron Corp, Wistron Corp, major MacBook maker Quanta Computer Inc, iPad maker Compal Electronics Inc, and AirPods makers Inventec Corp, Luxshare-ICT and Goertek have been asked to evaluate options outside of China.
The countries in the running include Mexico, India, Vietnam, Indonesia and Malaysia.
The U.S. is notably absent from the list. Major Chinese Apple supplier Foxconn committed to building a multi-billion dollar plant in Wisconsin, but so far there’s not much activity at the site.