Apple doesn’t want to depend so much on China, but it has nothing to do with the trade war

Mansana intends to diversify its product line to no longer depend almost exclusively on Chinaas reported Wall Street Magazine. The Cupertino-based company would already be in talks with some of its suppliers to explore the possibility of setting up new facilities in other Asian countries and moving some of its most important devices, such as iPhones, iPads and Macs, there.

The aforementioned report mentions that Apple does not intend to completely abandon China. After all, the Asian giant is one of the main markets for the California firm and accounts for one fifth of global sales. However, recent health restrictions in the face of COVID-19 outbreaks at key poles such as Shanghai, on top of earlier problems such as energy and semiconductor shortages, would cause alarm at the Tim Cook-led company.

Today, over 90% of Apple products made in china. This means that any new interruption to the production line could result in very serious losses for the company. Those from Cupertino are reporting impressive financial results with $97.3 billion in revenue in the second quarter of the fiscal year; however, they have already warned that coronavirus restrictions could cost them up to $8 billion in sales in the current quarter.

On the other hand, the lockdowns imposed by the Chinese authorities due to the pandemic prevented Apple from conducting more thorough checks on the condition of the production line. The company used to send out delegations of managers and engineers to personally inspect how its devices were made, which has been impossible in recent years; at least up to the level intended by Apple.

Apple would welcome the transfer of part of its production to India and Vietnam

One of the most realistic options for Apple to move some of its production out of China would be India. Those from Cupertino will see this country as one of the most suitable alternatives, especially due to its low production costs and large workforce.

In fact, the company has already been present in the said territory since 2017, when the iPhone SE was launched there. In addition, it was confirmed in April that Foxconn is already manufacturing the iPhone 13 in the country. Understandably, not all was rosy for Californians in India; In December, they closed one of the factories where their smartphones are made due to protests from workers and poor living conditions.

However, it is clear that Apple sees this country as a productive territory with great potential. In accordance with WSJ, the company has already made arrangements with some suppliers to expand its operations in India, including exports from there to other parts of the world. The main problem of companies based in China is the poor relations between the authorities of their country and their Indian counterparts, mainly because of the border dispute.

Relatively VietnamMeanwhile, Californians will also see this as an attractive alternative. Some of the components used in the iPhone are already made in that country, so Apple already knows its companies. But they might as well lean for experience in the production of devices for other companiesSamsung stands out in particular.

It takes a lot of money, plus benevolence

While there is no mention of when Apple intends to mobilize some of its production outside of China, it is indicated that Cupertino representatives have considered doing so. even before the pandemic. However, COVID-19 forced changes to – or cancellations of – any plans that may have been in place at the time. But, as we said at the beginning, the constant inconvenience for suppliers who cannot work normally has once again sparked interest in diversifying the production line.

The big challenge that both Apple and subcontractors will have to face will be economic. Developing the facilities and logistics needed to meet the needs of a California firm requires not only goodwill, but also a lot of money. And in a panorama of international uncertainty due to rising inflation, the war between Russia and Ukraine, shortages of chips and rising prices, it remains to be seen who is ready to make this effort.

Apple is a customer that no company wants to lose, and this will also be a defining moment for evaluating the next steps.