Apple Inc has advised several of its contract manufacturers that it wants to boost manufacturing outside of China, according to the Wall Street Journal, citing individuals familiar with the situation.
According to the source, India and Vietnam, which are already Apple production sites, are among the nations being considered as alternatives to China.
This move by Apple, the largest US company by market capitalization, will influence the thinking of other Western companies considering reducing their reliance on China for manufacturing or key materials in the aftermath of Beijing's indirect support for Russia's invasion of Ukraine and lockdowns in some cities to combat Covid-19.
Analysts estimate that over 90% of Apple products, including iPhones, iPads, and MacBook computers, are produced in China by third-party contractors.
In April, in response to Apple's supply chain issues, Chief Executive Officer Tim Cook stated, "Because our supply chain is global, our goods are manufactured all over the world. We are still looking into optimizing."
The supply chains of many Western corporations have been impacted as a result of the lockdowns imposed in Shanghai and other cities as part of China's anti-Covid stance.
Apple warned in April that the reappearance of COVID-19 will reduce sales by much to USD 8 billion in the current quarter. Over the last two years, China's tough anti-Covid policies have prevented Apple from sending executives and engineers into the country, making it difficult for them to inspect manufacturing locations in person. Last year's power disruptions further harmed China's image of dependability.
Except for India, China has a pool of competent employees that exceeds the whole population of several other Asian nations.
According to those acquainted with the situation, Apple considers India to be the next China since the two countries have similar populations and provide inexpensive prices. According to sources familiar with the situation, Apple is in talks with several existing suppliers about expanding in India, including export production.
According to research firm Counterpoint, India produced 3.1% of the world's iPhones last year, and the amount is expected to rise to 6% to 7% this year.
According to some analysts and suppliers, the Chinese-based assemblers would have difficulties in setting up a business because relations between New Delhi and Beijing have worsened since the two countries' forces had a fatal conflict in 2020. According to sources acquainted with the situation, this is why China-based manufacturing contractors doing business with Apple are looking for opportunities in Vietnam and other Southeast Asian countries.
Foxconn Technology Group and Wistron Corp., both located in Taiwan, have previously established plants in India to make iPhones primarily for that country's domestic market, where Apple sales are increasing quickly.
Apple announced in April that it has begun manufacturing the current generation of iPhones and the iPhone 13 series in India.
Such moves need significant investment by suppliers, according to analysts and suppliers, which makes them nervous at a time when the global economic picture is clouded by high commodity prices, the Ukraine crisis, and stock-market gyrations.