With the resurgence of COVID-19 cases in China, the country has been forced to impose frequent lockdowns, straining Apple’s production supply chain. Reputed Tianfeng International Securities analyst Ming-Chi Kuo’s latest report claims Apple is now working on an “action plan” to diversify its risks and shift production out of the country.
It is no secret that Apple’s contract manufacturers, such as Foxconn, have been struggling with the frequent lockdowns in China over the last few months. During such lockdowns, these facilities need to halt production or regularly test workers for signs of infection.
Apple successfully weathered two years of the pandemic with minimal supply chain disruptions. Kuo says that at the time, plans to diversify production only reached a proposal stage internally at Apple. However, the recent string of lockdowns has forced Apple to convert the proposal into an action plan.
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Apple's new product introduction (NPI) sites are almost in China. It was the first time for Apple to evaluate building NPI sites in non-China seriously when the COVID-19 outbreak first occurred about two years ago, but internally it only proceeded to the proposal stage.— 郭明錤 (Ming-Chi Kuo) (@mingchikuo) April 21, 2022
Notably, Kuo doesn’t specify a tentative timeline for when Apple could act on its “action plan.” Meanwhile, other reports suggest Apple is diversifying production to India, Taiwan, and other nearby countries. The company will likely share more details about its diversification plan during the next quarterly earnings call.
Do you think shifting production out of China could translate into reduced product pricing for customers in the countries where manufacturing shifts? Tell us in the comments section below.
