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Apple explores moving 15-30% of production capacity from China: Nikkei

Key Points
  • Apple reportedly has asked its major suppliers to assess the cost implications of moving 15% to 30% of their production capacity from China to Southeast Asia.
  • Apple's request was a result of the extended Sino-U.S. trade dispute, but a trade resolution will not lead to a change in the company's decision, Nikkei said, citing multiple sources.
  • The iPhone maker has decided the risks of depending heavily on manufacturing in China are too great and even rising, it said.
Apple CEO Tim Cook participates in an American Workforce Policy Advisory Board meeting with U.S. President Donald Trump and others in the White House in Washington, March 6, 2019.
Leah Millis | Reuters

Apple has asked its major suppliers to assess the cost implications of moving 15% to 30% of their production capacity from China to Southeast Asia as it prepares for a restructuring of its supply chain, according to a Nikkei Asian Review report on Wednesday.

Apple's request was a result of the extended Sino-U.S. trade dispute, but a trade resolution will not lead to a change in the company's decision, Nikkei said, citing multiple sources.

The iPhone maker has decided the risks of depending heavily on manufacturing in China are too great and even rising, it said.

Key iPhone assemblers Foxconn, Pegatron, Wistron, major MacBook maker Quanta Computer, iPad maker Compal Electronics, and AirPods makers Inventec, Luxshare-ICT, and Goertek have been asked to evaluate options outside of China, Nikkei reported.

The countries being considered include Mexico, India, Vietnam, Indonesia and Malaysia. India and Vietnam are among the favorites for smartphones, Nikkei said, citing sources who did not want to be identified as the discussions are private.

Last week, Foxconn said it had enough capacity outside China to meet Apple's demand in the American market if the company needed to adjust its production lines, as U.S. President Donald Trump threatened to slap further $300 billion tariffs on Chinese goods.

China is a key market for Apple as well as a major production center for its devices.

A group of more than 30 people from Apple's capital expense studies team have been negotiating production plans with suppliers and governments over monetary incentives that could be offered to lure Apple manufacturing, the report said.

A deadline has not been set for the suppliers to finalize their business proposals, Nikkei said, adding that it would take at least 18 months to begin production after choosing a location.

Apple and Foxconn did not immediately respond to a request for comment on the report.

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Key Points
  • Apple is reportedly preparing three new iPhones to launch in 2020, including two with 5G support provided by Qualcomm, according to TF International Securities analyst Ming Chi Kuo.
  • Apple is also reportedly building its own 5G chips to launch in either 2022 or 2023, according to Kuo.
  • Apple is reportedly aggressively pushing 5G development amid a ban on products from Chinese tech company Huawei.