Sources: Apple told some suppliers that it wants to boost production outside China, with a focus on India and Vietnam, citing Beijing's strict anti-COVID policy
iPhone maker tells suppliers it wants to manufacture more in India and Southeast Asia — TOKYO—Apple Inc.AAPL 0.17%▲ …
Wall Street JournalYang Jie
Context & Ripple Effects
Apple had already been expanding production of iPhones, iPads, Macs and other products in Vietnam and India in an earlier broad production expansion. The supplier request turns that direction into a response to China’s anti-COVID restrictions, rather than a purely incremental manufacturing buildout.
Later coverage frames the move as part of Apple’s effort to reduce dependence on Foxconn, while the subsequent request to shift some AirPods and Beats assembly to India shows the diversification extending beyond core iPhone production.
First-order effects
Apple’s suppliers in India and Vietnam are asked to prepare for more Apple manufacturing, while China-based production faces reduced priority for incremental capacity.
Apple gains additional assembly options outside China in response to the disruption risks it identified in Beijing’s COVID policy.
Second-order effects
Foxconn and other China-centered assemblers face a stronger incentive to compete for Apple volume as Apple asks alternative suppliers and sites to plan product assembly.
India and Vietnam become candidates for a broader mix of Apple products, a trajectory later reflected in the request to move some AirPods and Beats production to India.
Third-order effects
Apple’s supply chain is moving toward a multi-country assembly model in which China remains central but no longer carries all expansion capacity.
The later decision to hold India’s production share steady after local sites struggled without China-based teams suggests that diversification depends on transferring operating expertise, not simply adding factories.
The trend: Apple is using supplier diversification across India and Vietnam to reduce concentration in China, while preserving the China-based capabilities needed to run complex production.
1/2. HT to @_Capitaltryst_ on this one: “More than 90% of Apple products such as iPhones, iPads and MacBook laptops are manufactured in China by outside contractors, according to analysts.....” https://www.wsj.com/...
Apple products are “made everywhere” (as I explained in #Connectography) but see #TheFutureIsAsian on the political and cost advantages of diversifying #SupplyChains out of #China into #India and Southeast Asia: https://www.wsj.com/...
“Any move by Apple to emphasize production outside China could influence the thinking of other Western companies...considering how to reduce dependence on China.” As I argued last week for @NikkeiAsia diversifying away from China has a new lease on life. https://www.wsj.com/...
India is the next China! (stmt from 2000, 2010 that might finally be true). “People who have spoken with Apple about its manufacturing plans said the company sees India as the closest thing to the next China, owing to its large population and low costs.” https://www.wsj.com/...
China's lockdowns are an underreported and poorly understood reason for our inflation woes. A lack of stuff creates shortages and, thus, higher prices. Apple is an example we can all understand but there's a million arcane products made in China. https://twitter.com/...
Apple has told some suppliers it wants to boost production outside China and is giving India and Southeast Asia a closer look, according to people involved in the discussions https://www.wsj.com/... via @WSJ I told you supply chain of Apple is a mess