TAIPEI – Apple has stepped up production of iPhones, iPads, Macs and other products outside of China, Nikkei Asia said, in a sign that the technology giant continues to accelerate its production diversification, despite the hope that tensions US-China will ease under President Joe Biden.
Sources said that iPad production will start in Vietnam as early as the middle of this year, marking the first time that the world’s largest tablet maker will build a significant number of devices outside of China. California tech giant is also stepping up iPhone production in India, the second-largest production base for the iconic device, sources added, with plans to start producing the latest iPhone 12 series – the first 5G smartphones of the company – there as soon as this quarter.
Apple is also increasing production capacity for smart speakers, headphones and computers in Southeast Asia as part of its ongoing diversification strategy, the sources added.
In Vietnam, Apple is mobilizing suppliers to expand production capacity for the latest version of HomePod mini, the affordable version of its range of voice-activated smart speakers. The device has been produced in Vietnam since it was introduced last year. The Cupertino-based technology giant has already increased local production of its audio products, including its various AirPods, sources said.
Apple has moved some of its Mac mini production to one of its desktop computers in Malaysia, another person familiar with the matter told Nikkei, and the company plans to move some of its MacBook production to Vietnam this year. Most of its computer production remains in China.
“Apple and many other technology companies want all of their production capacity outside of China, and this has not slowed down, even though the US has a new president,” said a supply chain manager. “And he studies not only peripheral products. Apple, for example, aims to grow its capacity in new locations – mainly Southeast Asian nations – for more commodities, such as iPhones, iPads, MacBooks, AirPods and other. It was hard to imagine that two years ago, but now, nothing is impossible to change. “
Apple suppliers have worked to satisfy their customer’s desire for more diverse production bases. Key supplier Foxconn, officially marketed as Hon Hai Precision Industry, injected $ 270 million to set up a subsidiary in Vietnam late last year as part of the Taiwanese company’s efforts to expand its production capacity in the country. Luxshare Precision Industry, a new iPhone assembler that is also a key supplier of AirPods, is increasing its capacity in North Vietnam for the HomePod mini to meet supply constraints for the popular device, Nikkei said.
Apple’s moves are part of a larger trend for global technology giants to reduce their dependence on production from China, long known as the world’s factory. Rising labor costs in the country, protracted trade tensions between Washington and Beijing and the outbreak of the coronavirus pandemic that has severely disrupted the supply chain have led to risks of being too dependent on one country. Moreover, the US government has launched a “supply chain restructuring” campaign and urged technology providers to move away from China, Nikkei previously reported.
China, which boasts the world’s most sophisticated and comprehensive supply chain, remains a key production hub for large technology companies, but Apple’s decision to move such a wide range of products from the country indicates that the technological decoupling of the two countries is likely to continue in 2021.
And while there is some hope that the political climate will improve under the new US president, Biden said he will not immediately reverse the tariff policy the Trump administration has implemented against China in mid-2018 – a policy that has seen in finally the tariffs charged Chinese imports worth $ 360 billion.
China, Goertek, a key set of Apple AirPods, has asked all its suppliers to assess the feasibility of moving production to Vietnam since the end of 2018 and was the first Apple supplier to confirm a production transfer plan. In 2019, Apple asked several suppliers to study the cost implications of moving around 15% to 30% of Chinese production for a wide range of product lines. The AirPods series, which delivers about 90 million units a year, went into trial production in Vietnam for the first time in the summer of 2019, followed by mass production in 2020. Part of the production of AirPods Pro, AirPods Max and HomePod mini have was also allocated. in Vietnam last year. Apple began making the iPhone 11 in India in 2020.
Apple did not respond to Nikkei’s request for comment.