Apple is beginning to intensify its divestment from its reliance on manufacturing in China.
- As we previously reported, China’s relationship with Apple is straining as the country is facing disruptive protests, disruptive government policies, and supply chain delays during the holidays.
- The company is reportedly accelerating its diversification of production away from China into other East Asian countries like Vietnam and India, to protect the overall supply chain of its products.
- Analysts say major producers like Pegatron and Foxconn are already investing in new facilities and personnel training.
Why it’s News
Ivan Lam and Shenghao Bai are analysts for Counterpoint Research, and they note that electronics manufacturers are “moving faster” to diversify global production, relying less on China. The effort to move widespread production is a multi-year effort though.
“They caution that a direct replacement for China isn’t immediately in the cards, however firms like Hon Hai, also known as Foxconn, and fellow Taiwanese assembler Pegatron Corp. are putting the foundations in place to handle more of the final assembly and packaging of products outside China,” says Bloomberg.
Counterpoint says Indian smartphone manufacturing already increased 16% in the second quarter while China’s workforce continues to shrink. iPhone 14 and iPhone 14+ models are already in production in India, with its plants beginning to rival Chinese production.
Backing up a Bit
Following supply-chain breakdowns as a result of COVID-19, the world economy has pushed for less total reliance on China to provide essential products. The country has been facing new stress due to its insistence on the “Zero COVID Policy,” locking down entire cities, shutting down entire industries, and sparking massive protest movements, who were taking advantage of the iPhone’s AirDrop feature to collaborate and coordinate.
Apple continues to have strong ties to the Chinese government and cracked down on AirDrop access in its most recent update.