Silicon Valley tech giant Apple is reportedly considering moving iPhone production out of China in an attempt to reduce its exposure to the trade war between the United States and China and to diversify its supply chain.
The Nikkei Asian Review reports that Apple is considering moving between 15 and 30 percent of its iPhone production away from China in an attempt to insulate itself from the effects of the trade war between the U.S. and China. The company would reportedly be moving much of its production to Southeast Asia in a dramatic restructuring of the firm’s supply chain.
The sudden move is reportedly the result of increased tariffs on Chinese imported goods due to a trade war between the U.S. and China. One source told Nikkei that Apple would still be considering this move regardless of the tariffs, however, as the firm attempts to diversify its supply chain. The source stated: “A lower birthrate, higher labor costs, and the risk of overly centralizing its production in one country. These adverse factors are not going anywhere,” referencing issues facing China.
If Apple does choose to diversify its supply chain, the change will be gradual with one supplier telling Nikkei that we may not see any real effects until “two or three years from now.”
Wedbush analyst Daniel Ives said in a note this week that such changes would be a “gargantuan [sic] endeavor,” and added that: “We believe this is all a poker game and Apple will not diversify production out of China overnight and certainly a long-term US/China trade deal is key for Cook & Co. to sleep well at night.”
According to sources, Mexico, India, Vietnam, Indonesia, and Malaysia, are all countries being considered by Apple as a possible production location. India and Vietnam are reportedly frontrunners for iPhone production. Apple declined to comment when contacted by Nikkei.