TAIPEI – Apple is increasing production of iPhones, iPads, Macs and other products outside of China, Nikkei Asia learns, in a sign that the tech giant continues to accelerate its diversification of production, despite the hope that US tensions -China decrease under President Joe Biden.
Sources said iPad production will begin in Vietnam as early as this year, marking the first time that the world’s largest tablet maker will build a significant number of devices outside of China. The California tech giant is also increasing production of the iPhone in India, its second largest production base for the iconic device, the sources added, with plans to start producing the latest iPhone 12 series – the company’s first 5G smartphones – there as soon as this quarter.
Apple is also increasing production capacity for speakers, headsets and smart 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 HomePod mini, the affordable version of its line of intelligent voice-activated speakers. The device has been produced in Vietnam since it was launched last year. The Cupertino-based technology giant has already increased local production of its audio-related products, including its various lines of AirPods, the sources said.
Apple has moved part of the production of the Mac mini, one of its desktops, to Malaysia, another person familiar with the matter told Nikkei, and the company is also expected to transfer part of its MacBook production to Vietnam this year. Most of its computer production remains in China.
“Apple and many other technology companies want production capabilities outside of China, and that hasn’t diminished, even though the United States has a new president,” said a supply chain manager. “And they are studying not just peripheral products. Apple, for example, aims to build capacity in new locations – mainly Southeast Asian nations – for several essential products, such as iPhones, iPads, MacBooks, AirPods and others. It was hard to imagine that there two years, but now, nothing is impossible to change. “
Apple’s suppliers have been working to fulfill their customers’ desire for more diverse production bases. Lead supplier Foxconn, formally traded as Hon Hai Precision Industry, injected $ 270 million to open a subsidiary in Vietnam at the end of last year as part of the Taiwanese company’s efforts to expand its production capacity in the country. Luxshare Precision Industry, a new iPhone maker that is also a major supplier of AirPods, is increasing its capacity in northern Vietnam for the mini HomePod to address supply restrictions for the popular device, Nikkei learned.
Apple’s changes are part of a larger trend by global technology giants, reducing their dependence on production from China, long known as the factory of the world. The country’s rising labor costs, prolonged trade tensions between Washington and Beijing and the outbreak of the coronavirus pandemic, which severely disrupted the supply chain, increased the risks of being too dependent on a country. In addition, the US government launched a “supply chain restructuring” campaign and urged technology suppliers to move out of China, Nikkei previously said.
China, which has the most sophisticated and comprehensive supply chain in the world, remains a key manufacturing center for large technology companies, but Apple’s decision to move such a wide range of products outside the country indicates that decoupling technological change in both countries is expected to continue in 2021.
And while there are hopes that the political climate will improve with the new U.S. president, Biden said he will not immediately reverse the tariff policy that the Trump administration implemented against China in mid-2018 – a policy that ended up generating tariffs charged over $ 360 billion Chinese imports.
China’s Goertek, a major Apple AirPod maker, asked all of its suppliers to assess the feasibility of transferring production to Vietnam as early as 2018, and was the first Apple supplier to confirm a plan to change production . In 2019, Apple asked several vendors to study the cost implications of moving about 15% to 30% of production outside China to a wide range of product lines. Its AirPods series, which ships around 90 million units a year, went into experimental production in Vietnam in the summer of 2019, with mass production continuing in 2020. A part of the production of AirPods Pro, AirPods Max and the HomePod mini was also allocated to Vietnam last year. Apple started making the iPhone 11 in India in 2020.
Apple did not respond to Nikkei’s request for comment.