Apple factory for many years, China is no longer untouchable. Annoyed by Beijing’s “zero Covid” strategy and worried about tensions between China and the United States, recently exacerbated by the visit to Taiwan of the speaker of the House of Representatives, Nancy Pelosi, the Cupertino company wants to distance itself with the Middle Kingdom. In this context, the American company has been considering for some time to review its industrial organization to increase the share of its devices assembled outside China, a country which currently concentrates more than 90% of its production.
A trend that is confirmed two weeks before Apple’s keynote, during which the iPhone 14 should be unveiled, since the American giant will start manufacturing its next smartphone in India earlier than the old models. According BloombergTim Cook’s group plans to start production of the iPhone 14 in India just two months after the delivery of the first iPhones produced in China, instead of six to nine months for the previous models.
India for the iPhone, Vietnam for the Apple Watch and MacBooks
In this context, the Californian firm is working with suppliers to accelerate its production in India, so that the first iPhone 14s manufactured in the country will be ready at the end of October or November. Thus, Foxconn, Apple supplier based in Taiwan, will use its factory located outside the city of Chennai, in southern India, according to Bloomberg. Apple produced 3.1% of its devices in India in 2021, according to Counterpoint.
In addition to India, other countries should be favored by Apple for the production of its products, like Vietnam. According Nikkei Asia, the American company’s suppliers are currently in talks to produce Apple Watches and MacBooks for the first time. With this in mind, the Chinese supplier Luxshare Precision Industry and the Taiwanese company Foxconn have started to test the production of Apple Watch in northern Vietnam, reports the Japanese economic weekly.
Beijing’s “zero Covid” strategy is costing Apple dearly
The honeymoon therefore seems well and truly over between Apple and China, even if the apple brand is not going to suddenly reduce the production rate of its products in the country led by Xi Jinping. But the drastic confinements imposed in several major cities in China have pushed Apple to act quickly so as not to find itself in an untenable position, the resurgence of the Covid-19 pandemic having caused the closure of key factories for the electronics industry.
A situation aggravated by supply problems linked to a long-lasting global shortage of electronic components. The American firm had also warned that these difficulties risked costing it between 4 and 8 billion dollars over the past quarter. A price too high for Apple, which was able to count on the iPhone to save its quarter between April and June.