GoerTek Inc, one of Apple’s main suppliers, is looking to join Apple in divesting production facilities away from mainland China.
Key Details
- Apple continues to diversify its production efforts and divest from mainland China following months of political unrest and supply-chain issues, which only grow more intense as U.S.-Chinese relations grow tense.
- GoerTek Inc.—which produces AirPods, Playstations, virtual-reality headsets, and other entertainment and home securities technologies—is the newest company under the Apple umbrella to join it, investing $280 million to build a new plant in Vietnam.
- Deputy Chair Kazuyoshi Yoshinaga says the company may also build a facility in India. He says the company’s new Vietnam facility in Bac Ninh will be operational within the next year.
Why It’s News
Tensions between the U.S. and China continue to rise, with the U.S. sending dozens of troops to the small island nation and flying fighter jets over the straight of Taiwan. China’s economy and political situation had improved internally since this fall when the government’s Zero-COVID policy resulted in political unrest that shut down supply lines for products to be exported to the U.S.
The tension has only created an incentive for Apple to diversify its production capacity. As we previously reported, India has been welcoming to the company and its efforts to move to India. India’s Commerce Minister Piyush Goyal claims that Apple plans to move about 25% of its production to its nation and away from China.
Apple hasn’t announced plans to shut down any Chinese facilities, careful not to offend the Chinese government, but could be quietly planning to move the majority of its suppliers and 10% of its production capacity within the next eight years or sooner, Bloomberg reports. GoerTek tells Bloomberg it could happen faster.
Notable Quote
“Starting from last month, so many people from the client side are visiting us almost every day, [asking] when can you move out?” Yoshinaga tells Bloomberg.
“We get requests from our clients almost every month. Do you have any plans to expand to India? If they decide to build up the production lines in India, we may have to think about it seriously. Currently, we are focusing on developing our Vietnam production facilities,” he continues.
